What are the psychological mechanisms behind arrogance? According to this Wiktionary defintion, arrogance is 


  1.The act or habit of arrogating, or making undue claims in an overbearing manner; that species of pride which consists in exorbitant claims of rank, dignity, estimation, or power, or which exalts the worth or importance of the person to an undue degree; proud contempt of others; lordliness; haughtiness; self-assumption; presumption.


It is often something that many others in the vicinity find repulsive, sometimes without the person realising it, but, more often than not, they do realise it.

What are the psychological mechanisms that lead to arrogant thoughts, words and actions?
Clinically, arrogance is often associated with narcissistic personality disorder.

Narcissistic personality disorder is one of a group of conditions called dramatic personality disorders. People with these disorders have intense, unstable emotions, and a distorted self-image. Narcissistic personality disorder is further characterized by an abnormal love of self, an exaggerated sense of superiority and importance, and a preoccupation with success and power. However, these attitudes and behaviors do not reflect true self-confidence. Instead, the attitudes conceal a deep sense of insecurity and a fragile self-esteem. People with this personality disorder also tend to set unrealistic goals.

DSM-IV-TR diagnostic criteria include (reprinted here):

Criteria for narcissistic personality disorder to be diagnosed include:

Having an exaggerated sense of self-importance
Being preoccupied with fantasies about success, power or beauty
Believing that you are special and can associate only with equally special people
Requiring constant admiration
Having a sense of entitlement
Taking advantage of others
Having an inability to recognize needs and feelings of others
Being envious of others
Behaving in an arrogant or haughty manner


From a scientific standpoint, these characteristics can be difficult to pin down, and clinically, NPD is an &quot;Axis II&quot; diagnosis, which means that most insurance (in the United States) won't cover treatment of the disorder in and of itself.
Consequently, the push to discovering its underlying mechanisms may be less strong, but from theory, they are largely believed to be based on environment.
Proponents of the diagnosis are attempting to adjust the diagnostic criteria a bit to make it more objective for the upcoming DSM-V release.