People perceive the consequences of their own actions differently to how they perceive other sensory events. A large body of psychology research has shown that people also consistently overrate their own performance relative to others, yet little is known about how these "illusions of superiority" are normally maintained. Here we examined the visual perception of the sensory consequences of self-generated and observed goal-directed actions. Across a series of visuomotor tasks, we found that the perception of the sensory consequences of one's own actions is more biased toward success relative to the perception of observed actions. Using Bayesian models, we show that this bias could be explained by priors that represent exaggerated predictions of success. The degree of exaggeration of priors was unaffected by learning, but was correlated with individual differences in trait optimism. In contrast, when observing these actions, priors represented more accurate predictions of the actual performance. The results suggest that the brain internally represents optimistic predictions for one's own actions. Such exaggerated predictions bind the sensory consequences of our own actions with our intended goal, explaining how it is that when acting we tend to see what we want to see.