Illusory superiority[1] is a real issue - about 70% of people think they are above average, so they keep demanding above-market salaries.
Plus, as I mentioned in my previous post, other employers have harder time evaluating person's skills through interviews than a company that currently employs them. So they offer above-average salary to your average employees and by the time they realize that they overpaid for their skills it usually is too late, so they keep them on payroll anyway - that's basically how IT salary bubble works, most of the time :) (at least that's how it works in Poland, I don't know a thing about US job market)
So what you are saying is that they can get and retain a higher salary elsewhere, but that isn't what they are worth? Sounds like the market is disagreeing with your price evaluation, and the market is more right then you are.
I honestly don't know what's the point of mentioning an offer to your current employer. If you have a better offer - take it, don't let me hold your career back, good luck, no hard feelings on my side.
From my experience the reason why employees who have another offer even bother to mention it to their current boss, asking for counter, is because that other offer has some serious downside that prevents them from just accepting it right away.
Anyway, I can probably replace you with someone that will gladly take your current salary. And if I can't and end up paying your replacement the money you demanded (or more) at least I'll be paying that to the guy who is happy to work for me, not to someone who is already actively looking for other jobs.
Illusory superiority[1] is a real issue - about 70% of people think they are above average, so they keep demanding above-market salaries.
Plus, as I mentioned in my previous post, other employers have harder time evaluating person's skills through interviews than a company that currently employs them. So they offer above-average salary to your average employees and by the time they realize that they overpaid for their skills it usually is too late, so they keep them on payroll anyway - that's basically how IT salary bubble works, most of the time :) (at least that's how it works in Poland, I don't know a thing about US job market)
[1] https://en.wikipedia.org/wiki/Illusory_superiority