Someone living in a fantasy world of their own creation. Generally lies to either make themselves look 'cool' or to become more popular.
Compulsive liars also lie to gain the upper-hand in arguments or confrontations and to provoke sympathy from their peers.
"I'm moving to Canada"
"I'm earning at LEAST £20k + bonus"
"I'll send your PSP as soon as I get the money"
"My Mum died.. twice"