For the beginning of this thread and its explanations, see here.
Ketubot tractate, page 17a:
The rabbis asked: What praise do we sing of a bride? The school of Shamai say: praise her as she is. The school of Hillel say: Beautiful and coy. The school of Shamai asked the school of Hillel: What if she's a cripple, or blind, how can you say she's beautiful and coy? After all, the Torah has told us "Keep your distance from lies"? (Exodus 23 verse 7). The school of Hillel responded to the school of Shamai: by your method, when someone makes a poor purchase, should we praise their choice or mock it? We should praise it (implied: tell a white lie). Therefore the rabbis said: one should always strive to be engaged with all people. And Rashi adds: to encourage each person.
(My rather clumsy translation)