Name Dropping

Since they think they already know a lot of information about other people that they know, meet, or see, Narcissists will often accuse another person of lying, making things up, and exaggerating or embellishing when a person says/does something that doesn't line up with the N's assumptions about them.
Whether it's something about the person's past experiences, something having to do with their skill set, their knowledge or ability, achievements, or other people they're connected to in some way, a Narcissist will assume they're "making it up" if what they're saying does not line up with the N's assumptions about them.
(The Narcissist can't be wrong, and already has a picture of the person painted in their minds, so anything that doesn't line up with THEIR picture of the person must be wrong or untrue.).

If someone else (especially a target) were to tell a Narcissist something that another person has done or said, the Narcissist will ONLY BELIEVE THEM if whatever they say lines up with what they already believe to be true.
For example if a Narcissist thinks Carl is a "good person", then if someone complains about Carl being mean to them, or doing something unfair or shady, the N. won't believe it, and will argue that it isn't true. Their defense of Carl isn't really about Carl, it's about their own picture of Carl needing to be RIGHT.
On the other hand, if they think Carl is a "lazy" or "stupid person", then when someone tells them about Carl's achievements, accomplishments, and success, they will be dismissive and negative about it, or act utterly shocked, or refuse to believe that it's true. Again, it's not about CARL, it's about the N. needing to be RIGHT, and needing the picture they have painted of Carl to stay the same. Carl has to either be one of the good people that they're associated with, or Carl has to be some kind of 'loser' that they can compare themselves to and feel superior to.

"Name dropping", for example, falls in this category.
While a person with Narcissism will "name-drop" in order to make themselves sound associated with another certain person and make themselves seem more important, they will assume that someone else (especially a target) is making things up or embellishing ("name-dropping") if they mention a connection with a person who's famous, wealthy, or in authority.
For example when Jay, who has Narcissism, tells about his job in California, he will keep mentioning famous people he worked with, worked for, or happened to cross paths with, and he'll say their names like he's close friends with them. He's "name-dropping", not just relating his experiences, because he's trying to create the impression that he's "in with" those famous people, and that the person he's talking to is NOT, and that makes him more important (in his mind).
However when Sally is talking about her job, she also mentions famous people, because they were part of the experience she's telling about. She's relating what actually happened, but she's not mentioning their names in order to make herself sound more important. She might be excited about working with them, or she might have found some of them difficult, but that's part of her experience she's telling about.
~ JAY assumes that "name-dropping" is what she's doing,  because that's what HE does.

Sonya and Rachel both have relatives who are famous and "powerful". But the way they mention those relatives are quite different.

Sonya seems to find a way to "drop" their names into conversation in a subtle way, and she does it often, so that most people who know her also know about her relatives, and remember WHO they are and what the relationship is.
She'll say something like "oh I'm so tired..." then the other person will say "how come?" she'll answer with "oh, well I just got back from helping my cousin Oprah help her clean out her closet." then, of course, the other person will say "Your cousin Oprah? THE Oprah?" and then Sonya will say "yeah, that's the one... she needed my help to figure out how to arrange her shoes, I'm always going over there to help her... she can be so sweet, but she's such an airhead sometimes..."

Subtle... "I was doing this mundane, annoying thing... and oh yeah I happened to be doing that with my famous, important relative...oh what a bother that was... she's always bugging me..." or "Oh yeah, we all went to the park and had a great time... when my (famous/powerful relative) ate a tuna sandwich, he didn't really like it, so he said '(yah yah yah)'..." She talks about the famous relative not liking the tuna sandwich, but she doesn't mention her Aunt who's not famous slipping in the mud and fracturing her wrist, or her younger sister's new puppy, or her cousin's announcement about his engagement, or even her daughter getting chased by a roaming, apparently vicious dog.

Name-dropping is when a person "SLIPS IN" other people's names while relating random stories and experiences, for the purpose of making an association between themselves and the "important" person. It seems to work pretty well on a lot of people; it's one of the tools in many Narcissist's toolbox.

Rachel's famous or "powerful" friends and relatives come up in conversation when it's actually relevant, just like any non-famous person would. Also, if the subject IS about them, specifically, or about having famous relatives.
For example, Rachel might say "I'm so tired", and the other person might say "how come?" and she would reply "I was just doing a lot this week, and I helped my Uncle clean out his closet."
For Sonya, saying "I'm so tired" was BAIT to get the other person to ask "How come?" so she could say "my cousin Oprah". But Rachel was just stating that she was tired. If the friend does not ask any more questions about cleaning out her Uncle's closet, it probably won't occur to Rachel to tell the person WHO her Uncle is. OR, Rachel might tell the person who her Uncle is, because she might feel like it's inappropriate NOT TO, if the person is a friend. (Imagine finding out after a couple of months or years that a friend of yours was Frank Sinatra's niece, or Barack Obama's first cousin, but she never mentioned it to you. It can feel like she was withholding the information on purpose from you, and can seem cliquey and elitist, or just weird.)

Since Narcissists use "name dropping" as a tool for tweaking their image, they tend to project that onto others. So when another person mentions working with someone famous or "powerful", meeting them, running into them, being friends with, or being related to someone famous or "powerful", a Narcissist will often immediately assume that's what they're doing.
That's the reason THEY would mention association with a famous/powerful person, so that's what they project onto the other person, automatically.

"Megan is always talking about her brother, that famous actor... she thinks she's so great..."
It doesn't occur to them that Megan would "always talk about her brother" if he was digging ditches or sweeping stables, because he's her BROTHER, and they're close; she's always talked about him a lot. But whenever she mentions his name, the listener doesn't think "Megan's brother".. the listener thinks "That Famous Actor", and feels envious and jealous, and also intimidated. So the listener projects those feelings onto Megan, as if she's the cause of those feelings.