Filling the Gaps
When your kids interact with other children who brag about say - eating two scoops of chocolate-chip ice cream, buying a new home theater system or a vacation to Hawaii, your kids start feeling inadequate and inferior around their playmates. So, to get more competitive, they start exaggerating about incidents, making up stories and lie about accomplishments in their own family tree. They want to impress other kids around them and pretend to have the best life among them to make them feel jealous. It also helps them to make themselves feel better about them. This is pure innocence and again a result of their psychological defense mechanism.