I invite my partner to have dinner with my friends; alas, she says, she has a meeting, can't make it, what a shame. I pretend to believe this; my friends pretend to believe I believe this; I pretend to believe they believe this; my partner pretends to... (etc etc etc).
In fact, my partner just doesn't like my friends very much, and we all sort-of know this: nobody is fooled by her excuse, and nobody is fooled about anyone else's fooled-ness. But we all have (barely) plausible deniability: nobody is provably lying, or provably aware that someone else is lying, either.
There are many similar ideas in our conceptual lexicon, but to my knowledge there's no name for this thing specifically.
- We have the idea of common knowledge (everyone knows X, and everyone knows that everyone knows X) versus mutual knowledge (everyone knows X, but doesn't know whether everyone else knows X).
- We have the idea of (barely) plausible deniability: there's no absolute proof I know X, even if everyone strongly suspects I know X.
- Timur Kuran says fascinating things about preference falsification, but that's about situations where a small group of participants actively want to avoid the truth getting out, and everyone else is faking it under threat of punishment.
"Everyone knows that everyone is lying, and everyone prefers to keep up the mild pretense" feels like its own unique dynamic. I think this combination should be called Common Pretense.
Once you see it it feels pretty prevalent:
- Religious leaders in liberal denominations pretending not to know that their congregants are breaking various strictures, and actively avoiding contexts where they might see it happening: e.g. congregants drive to the temple when they're not supposed to, but park around the corner, while the clergy walk to the temple through a roundabout route to avoid accidentally seeing the congregants arriving by car.
- Parents pretending not to know that their teenager [smokes/drinks/is kissing boys/is kissing girls/is kissing everyone]; child pretending not to realize that their parent knows about it, so nobody has to deal with it.
- Friends pretending not to know that one of them has a crush on the other one, who isn't interested.
You can think whatever you like abaout the harms or benefits of living a (white) lie in these situations; you might think it would be preferable if we all told everyone exactly what we thought and felt all the time. This is all fine but it's a deeper question about the human experience.
The relevant thing is that you can have a situation where everyone tacitly agrees to live with a set of interlocking pretenses like this: nobody is being misled, and each person could break the pretense if they wanted to, but each one decides that it's politer or kinder or easier to (unconvincingly) keep pretending.