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delusion
labor under the delusion of/that
To live, operate, or function with the unyielding belief in something, especially that which is fanciful, unrealistic, or untrue. Primarily heard in US. Jeremy's always labored under the delusion of being a great writer, even though he's never written more than a few crummy poems. No one likes paying taxes, but those who would call for them to be done away with altogether are laboring under the delusion that our society can function without them!
delusions of grandeur
the belief that you are much more important or powerful than you really are Young bands sometimes get delusions of grandeur after their first number one hit.