Why do people lie?

"If you are going to lie, you better have a good memory."
                                                    Grandma Cabrera

My father's mother would say this quite often to her husband, he wasn't really in honest guy. Psychology Today magazine says that most people will tell several lies over the course of each day. In my opinion, lying can be considered the very glue that holds society together. The question is, how far do you allow people to go? Some people tell small little fibs, while others tell huge whoppers. Some you cannot even consider real lies, like nodding your head when someone is talking even though you are not listening.
It is amazing what people will lie about from the mundane to the extravagant. We all know a handful of the different types of liars. You have the amorous liar, who just has to tell you all about his latest bedroom conquest. They usually lie about how often they are intimate, what their partner looked like and if they are really brave, how many they bedded at one time. The most interesting part about these people is that you never meet these so-called lovers!!! They usually will attend every event solo with the comment that they go alone because they are on the prowl for their next hook up... they always go home alone too.
You also have the guy that I call "Well that's like..." You know this person; you are almost at the end of your story and they have to start in with their own tale, regardless how interesting your story might even be. Whatever job you had, they had at one time. Whatever place you may have visited, they have also been there. What is funny about these people, if you really listen to them, there is no way that they could have possible done all of the stuff they said they did unless they were like 150 years old!!!
Then there is my favorite liar, he is a very close cousin to "Well that's like...", he is the "One Upper". All of us have been forced to endure the One Upper at some point in our life. There is no end to the tales that they will tell and usually they are so outlandish that the one telling them is actually embarrassing themselves. If you went to Florida, they slept in the Disney Castle. If you said you slept in the Disney Castle then they banged Minnie in Cinderella's bed. They have partied with celebrities, have an unlimited amount of funds and know everything about every single subject.
So I ask this question again, how much of this bulls**t are you forced to endure before you call someone on it? Is there a secret code of decorum that states you must listen to "x" amount of B.S before you are actually allowed to call someone on it? Is it in the Geneva convention? At what point are they testing your intelligence or do they just simply think that you are a fool? Is the liar measured by the amount of lies told or the size of the lie? All I can say is that I am tired of listening to compulsive liars, tired of nodding my head and flexing my eyebrows as if I am believing this line of crap being spewed from some fool's mouth. I am 33 years old, my patience is at an all time low and I can almost guarantee that the next person who tells me about the imaginary girl that he hooked up with last weekend or about how their favorite celebrity just happened to buy them a drink, will fell my thunder. Ah, who am I to lie. I will probably just keep my mouth shut, smile and play the fool.
Is it hot in here or am I crazy?