Obviously, I don't own anything. Thanks to ElementalLiz for beta-ing.
If he's honest (ha, the Lie-smith honest, a better jest than even he could come up with), he hasn't ever understood what the point of having honor is.
He remembers (will never forget) when he first consciously questioned its necessity. He was very small at the time and he and Thor had snuck out to see some of the Einherjar returning from a skirmish where they'd attacked a camp of...it's funny; he doesn't even remember who they had fought. Just how badly they had lost. Just the blood pouring down their faces. Just the stench of their wounds.
Listening to the tale of the battle, Thor had been so impressed. So amazed by how they'd even come back alive. The story in his mind had been a bold attack on an enemy camp against impossible odds, a million-to-one chance, a lost cause, but a praiseworthy one, to be told in songs and tales, glorifying the dead.
Loki had been appalled.
He had innocently asked the commander why he had chosen to charge into the enemy camp when the Asgardians were clearly outnumbered, why he hadn't tried to whittle down the enemy forces by shooting them with arrows in the night, or by any number of other ways he could have killed more of the enemy without wasting his own men's lives. The room had gone silent. Everyone had stared at him.
Later, Father (not his father) had brought Loki into his study and delivered a long lecture on the importance of honor. Finally, he asked Loki if he understood why warriors must be honorable and chivalrous and brave, and so on, and so on. Loki had been honest; he said he didn't understand. Odin looked disappointed; he began to talk again. It seemed like it lasted for hours, but Odin said nothing new, or so it seemed to Loki. At the end, he asked Loki the question again. Did he understand why fighting honorably was important?
Loki lied.
He didn't want Father to be upset at him. It was his first big lie. Oh, he had lied about stealing sweets from the kitchens, about playing pranks on Thor, but not about important things. For a long time, even he would not recognize the enormity of this lie.
Loki lied for years.
He pretended he understood why he must put honor above his own life. When he was old enough to be trained, he fought honorably, the way he was supposed to.
And then Thor was wounded. Brave, honorable Thor, whose personality and values were everything Asgard esteemed. Yes, both he and Loki had gotten hurt in training at times, but this was different. He and his friends had gone on some quest without Loki, who wasn't yet old enough. This was real. Loki panicked. If Thor, who everybody could see was turning out to be an amazing fighter, could get hurt, what would happen to Loki? No one said it, but the truth was, while more than capable, more capable than most Asgardians even, Loki was not, and would never be, as good a fighter as a prince should be. Loki did not want to die (who would get Thor out of trouble when he was too thickheaded, too foolish, too headstrong, too Thor to get himself out of it?).
Loki does not want to die, does not want to look down at his hands and see blood and know that it is his own (he does not ever want to see Thor lying on the ground, gasping for breath). And he thinks, why? What is the point of being honorable if all it brings is pain and death?
Loki stops lying. He stops fighting honorably.
He starts to use ranged weapons, for all that he can fight well in close quarters. Why should he allow his enemies to get near him, why risk being hurt, if he doesn't need to? His tricks save his life and Thor's time and time again; for all that no one ever admits it. Thor splutters. His mother sighs. His father yells. The nobles whisper. The commoners gossip. He gains a reputation for being dishonorable, for tricking his enemies, for being wicked. They start to call him Loki Lie-smith, Loki Silvertongue, if they're being kind (they usually aren't). Loki doesn't care what people say.
(Yes he does. Of course he does. Even Loki, cold uncaring Loki, cannot help but be affected by almost universal derision.)
But neither Asgard's disdain nor his family's disappointment is enough to make him lie again, would never be enough to make him do that. Honor isn't worth the cost. He made that choice long ago, maybe even before a wide-eyed little boy stared up at bloodstained soldiers returning from a reckless skirmish. He's stopped lying, stopped pretending that he thinks honor is important, that it is worth his life and the lives of those he fights with. In the thick of battle, tricking his enemies with illusions, stabbing them in the back, he is brutally honest.