confabulation

confabulation \kon-FAB-yuh-lay-shuhn\, noun:

1. Familiar talk; easy, unrestrained, unceremonious conversation.
2. (Psychology) A plausible but imagined memory that fills in gaps in what is remembered.

Their sentiments were reflected neither in the elegant exchanges between the Viceroy and Secretary of State, nor in the unlovely confabulations between the Congress and the League managers.
-- Mushirul Hasan, "Partition: The Human Cost", History Today, September 1997

Sigmund Freud, a stubborn, bullying interrogator of hysterical women, harangued his patients into building fantasies and traumas that fit into his grand narrative scheme, eliciting confabulations rather than actual memories.
-- Jennifer Howard, "Neurosis 1990s-Style", Civilization, April/May 1997

Once we had brokwn the back of the ascent, the road spanned pleasant but lonely pinewoods which scented the still air and led uf in mysterious hesitant fashion to the gates of the little town, the Porte Trapani, where Roberto got down for a long confabulation with a clerk from the Mairie while the rest of us set about digging into our luggage for pullovers.
-- Lawrence Durrell, Sicilian Carousel

Confabulation comes from Late Latin confabulatio, from the past participle of Latin confabulari, "to talk together," from con-, "together, with" + fabulari, "to talk." It is related to fable, "a fiction, a tale," and to fabulous, "so incredible or astonishing as to resemble or suggest a fable."