Confabulation is the spontaneous narrative report of events that never happened.
It is fascinating to look at the reports of confabulation from the perspective of neuroscientists like Oliver Sacs and Rhawn Joseph, Ph.D. To watch Rhawn Joseph's clinical (college level) lecture on confabulation and the damaged human brain, visit Brain-Mind.
Confabulations are difficult to differentiate from delusions and from lying.
Confabulation consists of the creation of false memories, perceptions, or beliefs about the self or the environment usually as a result of neurological or psychological dysfunction.
The subject of confabulation is vast and not for the meek of mind and heart.
Please Read: Brain Fiction: Self-Deception and the Riddle of Confabulation (Philosophical Psychopathology)
Also See Russell Wright's Epimemetic Experimental Philosophy
Also See Existential Cognitive Dissonance