Truth is in the Eye of the Beholder

In An Occurence at Owl Creek Bridge, lies and falsehood come with the desire for survival.

At the chronological beginning of the story, Peyton Farquhar is visited by a thirsty gray-clad soldier who is actually a Yankee spy. The Yankee tells Farquhar about the stockades at the Owl Creek bridge, knowing he would get the Rebel excited.
In a war, two sides are pitted against each other, each using all of their strategies, resources, and wits in order to win. If the members of the opposing side are dead, they cannot fight back and kill you.
The Yankee lied to Farquhar because he wanted him to come to the bridge so that they would have a reason to hang him. With one more Confedate dead, there is one less Confederate that is able to kill a Union soldier. He wanted to survive, so he had to lie to get what he needed.

Later in the story, Farquhar stands on the gallows, waiting for his death. He doesn't want it to come; no man desires death. As he waits for the floor to drop, he imagines an intricate scenario (which he completely believes) in which the rope breaks and he manages to untie himself, dodge hundreds of bullets, swim downriver to safety, then come home to his wife and family after a long voyage through the woods. He believes in his own lie, as unrealistic as it is, because in it he survives, and that is all that every human and animal is trying to do.

The only lies told in the story were to protect the liars from their own mortality.