I've had this question posed to me by my directs, as well as having it in the back of my head as well.
As we are going through our end of year performance rating process, and are executing our self-assessment, I have wondered about the impact my self-ranking has on managements decision.
For example, I am very critical of myself, and therefore, I tend to be overly critical during self-assessment, which results in a ranking that isn't a top 10% ranking. Am I dooming myself to that ranking by not ranking myself in the top?
I know when I review my employees, I don't change my opinion based on what they rank themselves, but I've had several people in the past tell me they inflate their ranking in the fear that their managers will rank them lower if they see their employee ranking themselves lower.
What is your opinion?

Self-ranking guidance request
Have you listened to the podcast on Preparing for YOUR Review? Great stuff.
I think you should be honest about where you think your strengths and weaknesses are in relation to the position, and sometimes that means seeing through your own self-criticism and giving yourself a little credit. :wink: Come into the review prepared, and provide data ahead of time to remind your boss of all the good work you've done over the past year, but is has to be honest. This isn't working the system, it's just protecting your interests. You'd be shooting yourself in the foot by underestimating yourself, but it seems like it would be even worse to go in with an inflated ranking, not be able to back it up, and then force the manager into the awkwardness of having to tell you that you're not as good as you think you are. No fun.
The best case would be where your assessment and your manager's assessment match up pretty well - both parties are on the same page and it's easier to agree on where to leverage your strengths and work on improvements. If you (either as reviewer or reviewee) are doing the management trinity, odds are good that you've been on the same page all year long, and the review is just a written summary of the year's progress.
Unskilled and unaware of it
Funny, this has popped up recently in separate thread, so apologies for posting this twice...
There was a very interesting research project at Cornell which investigated how people rate themselves.
BLUF: Good people rate themselves so-so or OK because they have very high standards (which they don't meet). Mediocre people rate themselves highly because they have mediocre standards (which they meet).
Check out the research paper at:
http://www.apa.org/journals/features/psp7761121.pdf
John