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A confabulation is a fantasy that has unconsciously emerged as a factual account in memory. A confabulation may be based partly on fact or be a complete construction of the imagination.
The term is often used to describe the "memories" of people claiming to have been abducted by aliens, as well as "false memories" induced by therapists or interviewers, memories that often involve bizarre notions of satanic ritualistic sexual abuse of children. However, it seems that all of us confabulate at times. Not only do people with brain injuries that leave them paralyzed or blind, invent stories that explain why they can't move a limb or see without admitting to their disability, but perfectly healthy individuals make up stories at the slightest suggestion that they do so. An experiment on change blindness at Lund University exemplifies this point:
People were shown pairs of cards with pictures of faces on them and asked to choose the most attractive. Unbeknown to the subject, the person showing the cards was a magician and routinely swapped the chosen card for the rejected one. The subject was then asked why they picked this face. Often the swap went completely unnoticed, and the subjects came up with elaborate explanations about hair colour, the look of the eyes or the assumed personality of the substituted face. Clearly people routinely confabulate under conditions where they cannot know why they made a particular choice. (Phillips 2006)
In other words, as William Hirstein says, confabulation is not just a deficit of memory. It is something anybody might do, even people with perfectly fine memories and healthy brains. We know that children and many adults confabulate when encouraged to talk about things of which they have no knowledge. We know that eyewitnesses can be influenced by suggestive inquiries to confabulate. According to Helen Phillips, "some experts argue that we can never be sure about what is actually real and so must confabulate all the time to try to make sense of the world around us."
books and articles
"The Eyes that Spoke," by Martin Kottmeyer A case history of confabulation.
Mind Hacks - Researchers implant false symptoms: An intriguing study just published in the Journal of Clinical and Experimental Neuropsychology has found that we can be convinced we reported symptoms of mental illness that we never mentioned and, as a result, we can actually start believing we have the symptom itself.