Last Thursday, Michelle posted about establishing trust between writer and reader. I'd like to explore that a little more and talk about trustworthiness of narrators and trustworthiness of authors. This is also known as reliability.
Reliable/unreliable narrators: When a story is told from a first-person point of view, the reader has to discover how truthfully the character is relating the story. Some narrators lie to the reader. Some narrators think they are telling the truth, but they are wrong. Some narrators think they are telling the truth, and they are right. And narrators who are also characters in stories don't always know all of the truth, either. Sometimes they discover it as the story is told, along with the reader.
Narrators who deliberately lie are unreliable narrators. The books of Nabokov are famously populated by unreliable narrators, and a lot of the great Russian authors of the previous generation employed unreliable narrators as well. An unreliable narrator lets you keep secrets from the reader, generally for a major plot twist or 'reveal' at the end of the story. Iain Pears' An Instance of the Fingerpost is the same story told four times in a row by four different first-person narrators, each of whom is unreliable in some way. Some people think this is just gussied-up plot manipulation and is cheating the reader. However, if the reader knows the narrator is unreliable, I would say it just adds a layer of mystery to the story.
Narrators who think they are telling the truth but are wrong are also unreliable narrators. Sometimes, it's just that the narrator is missing information or has made wrong assumptions about other characters in the story. Think of the multiple narrators in Faulkner's As I Lay Dying. None of them quite know what the real situation is; between the six of them, the reader gets the whole story, but individually, the narrators are unreliable. This sort of unreliable narrator lets you incorporate dramatic irony into your story, where the reader knows things that the characters don't.
All first-person narrators will be unreliable to some extent, simply by being characters lacking omniscience. And as a rule, when narrators begin to editorialize, their reliability decreases. Salinger's Holden Caulfield is unreliable in that he doesn't understand the adult world toward which life is inexorably moving him, yet he gives a running commentary on it throughout the book.
Unreliable narrators are perfectly legitimate tools of a writer. They have a long and illustrious history, and can be very cool. What's not cool, however, is an unreliable author.
Unreliable authors: When a writer, as writer outside the story and not as character inside the story, withholds necessary information from a reader, he's unreliable and not to be trusted. For example, I've read mysteries where a new character is introduced in the final act and named as the murderer (this is just like a detective knowing clues that aren't shown to the reader). It cheats the reader and means that the writer isn't good enough to have constructed a mystery story properly.
Unreliable authors are usually not good story tellers, and try to compensate for this by cheating the reader. They throw all sorts of bizarre plot twists, characters and locations at the reader without actually resolving the central conflict of the story. Or, they resolve the central conflict in a way that makes the characters act out-of-character, or is simply unbelievable within the world the writer has established. Other unreliable author tricks include the deus ex machina, where the complications of the plot are resolved by forces outside the story.
In summary, it's okay to lie to your readers via a first-person narrator as long as the reader finds out in good time that the narrator is unreliable, but it's not okay to cheat your readers by manipulating the plot or hiding details or introducing new characters at the last minute or otherwise breaking the basic rules of storytelling.