but how does he know already that he is smarter than the average bear? He's been doing this since he was a toddler and we never really comment on how smart he is ...
He doesn't have to know how smart he is compared to others. He knows that he doesn't like to fail. When he reads aloud he hears his mistakes and he doesn't like that.
When kids have to make mistakes to accomplish most everything, they deal with it and move on. When things come easily, they can get hung up on making mistakes and will not put themselves in a position to make mistakes.
Even if we praise the hard work, we still have to provide the situations for making lots of mistakes. We also have to model the willingness to make mistakes and try things we don't think we can do (in front of other people).
I'm thinking about trying rock climbing at the local REI just because I don't think I can do it and I think it will be instructional to both me and my DD if I try.