| Quote #4
[The Master Horse] replied, "that I must needs be mistaken, or that I said the thing which was not;" for they have no word in their language to express lying or falsehood. "He knew it was impossible that there could be a country beyond the sea, or that a parcel of brutes could move a wooden vessel whither they pleased upon water. He was sure no Houyhnhnm alive could make such a vessel, nor would trust Yahoos to manage it." (4.3.4)
Master Horse is so shocked by Gulliver's stories of countries beyond the ocean that he actually imagines that Gulliver is lying – something that the Houyhnhnms could not previously think of. You say that the Master Horse has bit of cognitive dissonance, here, meaning he's hearing something that totally doesn't fit into his worldview. It's interesting to watch this happen to someone other than Gulliver for once.
| Quote #5
For [the Master Horse] argued thus: "that the use of speech was to make us understand one another, and to receive information of facts; now, if any one said the thing which was not, these ends were defeated, because I cannot properly be said to understand him; and I am so far from receiving information, that he leaves me worse than in ignorance; for I am led to believe a thing black, when it is white, and short, when it is long." And these were all the notions he had concerning that faculty of lying, so perfectly well understood, and so universally practised, among human creatures. (4.4.1)
The reason the Master Horse thinks that lying is impossible or against reason is because the point of speech is to communicate what you think. Why else would you talk? So, the thought of talking to obscure what you think seems totally inconceivable to the Master Horse.
| Quote #6
It put me to the pains of many circumlocutions, to give my master a right idea of what I spoke; for their language does not abound in variety of words, because their wants and passions are fewer than among us. But it is impossible to express his noble resentment at our savage treatment of the Houyhnhnm race; particularly after I had explained the manner and use of castrating horses among us, to hinder them from propagating their kind, and to render them more servile. (4.4.4)
The Master Horse finds the idea of the European Yahoo's treatment of horses to be totally disgusting. The Horse is definitely not cool with the idea of breaking his European cousins to the saddle and castrating male horses to make them more peaceful. But at the end of the book, the Master Horse suggests using the same methods on Houyhnhnm Land Yahoos to make them more obedient. This seems pretty hypocritical to us – can it be that the Master Horse is learning deceit from Gulliver?