When a person makes up a story and tells people just to see who believes them, it is often referred to as "fabricating" or "lying for the sake of deception" or "telling tall tales." This behavior can be a form of deception or manipulation, where the individual is intentionally misleading others.
If the person starts to believe their own lies, it can be attributed to a psychological phenomenon known as "pathological lying" or "pseudologia fantastica." In this condition, the person consistently tells lies, and over time, they may become so entrenched in their own falsehoods that they genuinely believe them to be true. This can happen due to various underlying psychological or emotional reasons, and it can be challenging for the person to distinguish between reality and their fabricated stories. It is considered a serious issue that may require professional help to address.