Lying in psychological language is what we now call denial. People are in denial for many reasons, often those reasons are to protect themselves from feeling hurt and facing the truth of it, or feeling guilt and accepting responsibility for their actions. If your friend could not accept the truth of how they actually placed, they perhaps have equated third place with losing and consider anything less than first a rank of personal shame, which is very hard to deal with for the average person. While denial because of guilt is concerning actions, shame is concerning the person himself or herself. Internally, both guilt and shame are hard to live with, although one can pardon himself or herself for guilty deeds, forgiving oneself for shame is a lot harder. Shame is something that shapes one's view of one's person. Shame negatively effects self-esteem and self-view and self-love and self-acceptance, all which are important for mental health and conducive to how one looks at and faces the world. Third place may not be first, but it definitely is not a cause for shame. Only one person can come in first, another second, and still another third, which still gets the bronze metal. When people are trying to protect themselves from personal shame and are in denial over it, they don't need a reality check, they need a cause to take comfort and the good kind of pride in it, on the road to self-acceptance.