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The author does not discuss lying in general but only that variety known in psychopathology as 'pseudologia phantastica' or phantasy lying. She defines this as really a day-dream which is told to others as reality. It differs from the day-dream in that it is freely told to others while the day-dreamer secretly keeps his dream to himself.
She gives in considerable detail the analysis of the pathological lies of a seventeen-year-old girl which consisted largely of love phantasies regarding a youth whom she knew only by sight. The analysis showed that the lies went back to actual happenings of a sexual nature between herself when five years old and a brother seven years old. These memories had been repressed and were later revived and displaced upon another object after puberty. The author compares the mechanism with that of hysteria. A short analytic sketch of a similar case in a boy is also given.
The chief conclusion is that such lies represent the distorted reappearance of something that once happened in reality, the memory of which has been repressed.