Psychological tests are objective standardized measures used in employee selection to assess abilities and predict future performance. They have advantages over other selection methods like interviews in being easier to evaluate and uncover hidden talents. However, they also have limitations like inability to perfectly predict job success, risk of unfair rejection, and potential for faking responses. Psychological tests work best as a supplement to other techniques rather than the sole evaluation method. Common types used include intelligence, aptitude, personality, and interest tests.