Yesterday I thougth I had good advice on this. Things changed a lot today. But I'll try to give my two cents anyway.
Narcisism is born from a fundamental insecurity, imo. It can be reinforced through negative life experiences, but the cause is this fundamental insecurity. You form this ideal version of yourself that you want to become
. The thing is that this ideal version is unnatainable. You will never be satisfied with how smart you are; how rich you are; how many women you have; etc. An unfortunate truth is that even if you were to attain this ideal, you wouldn't be happy and fulfilled. But what's really a gigantic and unbearable burden is having to live up to your own expectations for yourself. It causes a lot more pain than it solves. I know I set the bar so high that I would prefer to not even try, than to try and fail. What would failing imply? To become aware of something that we already know deep inside us: we are not as excelent as we think we are.
Why do we form these ideal characters? I think, because of that fundamental insecurity, we are more fragile in face of such things as failure, bullying, and rejection in general. One apparently good strategy is to form an internal representation of ourselves that is unatackable by the outside. That way criticism seems to be completely overcome. Even if this worked, there is a part that definitely doesn't work: our selfcriticism, our judgemental attitude towards ourselves. We keep ourselves on our toes to mantain this defense. Even to the point of serious self sabotage.
The good news? That fundamental insecurity is unfounded. It's not that we already are these ideal versions. It's that we are not nearly as bad as that insecurity made us feel. We have good talents, and other good qualities. This insecurity comes from a lack of affection during childhood, something that has none of our fault in it.
To overcome this I think a combination of samatha and vipassana is important. The Goenka method is very effective at bringing emotions to the surface. I think that being mindful of the insecurity sensations you feel, even with the subtlest of insecurities, leads to the deconstruction of this unnattainable ideal. Everytime you doubt yourself, try to catch that doubt and locate it in the body. Then observe the sensation objectively and mindfuly. Not much more can be said, I think. The rest is work.
He turns his mind away from those phenomena, and having done so, inclines his mind to the property of deathlessness: 'This is peace, this is exquisite — the resolution of all fabrications; the relinquishment of all acquisitions; the ending of craving; dispassion; cessation; Unbinding.'
(Jhana Sutta - Thanissaro Bhikkhu translation)