The polite reponce to a joke that isn't funny. It can be used in a number of ways:

- To cover that potentially awkward dead air when the joke is about you.

- To cover that potentially awkward dead air when the joke is about someone next to you.

- If used adroitly, the courtesy laugh can even be used to cover that potentially awkward dead air when you make the offending joke.

Example:
Jim says, "hey bob, is that your girlfriend?"
Bob responds, "ah... yeh"
Jim quips, "man she's hot... I sure would like to fuck her in the ass..."

crickets chirp

Bob lets Jim off the hook with a courtesy laugh, and segue ways into, "how about them Yankees..."

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