In A Separate Peace by John Knowles, what misunderstanding leads to the jouncing incident and what does Gene finally acknowledge to himself...

For the first three chapters we hear about who Finny is from Gene's intimidated perspective. Gene is intimidated by Finny's athleticism and easy social graces. Gene is Finny's foil and the complete opposite—a brainy introvert. Gene feels unequal to Finny on so many levels that he can hardly believe that they are best friends. This is the misunderstanding—that Finny is supposedly some superhero who can do no wrong and will never fail at anything.

Immediately prior to Gene jouncing Finny off of the tree limb, the two have a fight that reveals to both boys that their perceptions of each other are slightly wrong. Finny thinks that Gene doesn't need to study so hard to get good grades and Gene had thought that Finny was invincible. Gene realizes that Finny looks up to Gene in some ways and also feels vulnerable at times. But the argument preceding the tree incident gives way to some deep, dark feelings in Gene, who follows through with them by hurting Finny.

Gene's words of realization prior to the tree incident:

"Now I knew that there never was and never could have been any rivalry between us. I was not of the same quality as he" (59).