Cases in which people are self-deceived seem to require that the person hold two contradictory beliefs, something which appears to be impossible or implausible. A phenomenon seen in some brain-damaged patients known as confabulation (roughly, an ongoing tendency to make false utterances without intent to deceive) can shed light on the problem of self-deception. The conflict is not actually between two beliefs, but between two representations, a 'conceptual' one and an 'analog' one. In addition, confabulation yields valuable clues about the structure of normal human knowledge-gathering processes.
[The hypothesis defended here is significantly altered and greatly expanded in my book Brain Fiction.]