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Gather up that outside (.25" from edge) edge a lot, and gather the inside (.75" from edge) a little. This will make the sleeve head "cup" beautifully. Don't gather up that inside stitching so much that it gathers a lot. You just want it to ease or pull a lot of fabric closer.

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Burdastyle

http://burdastyle.com//techniques/insert-set-in-sleeve/technique_steps/4