Here’s a lovely article by Michael Shermer on the topic.
Why People Believe in Conspiracies A skeptic's take on the public's fascination with disinformation By Michael Shermer | September 10, 2009
After a public lecture in 2005, I was buttonholed by a documentary filmmaker with Michael Moore-ish ambitions of exposing the conspiracy behind 9/11. “You mean the conspiracy by Osama bin Laden and al Qaeda to attack the United States?” I asked rhetorically, knowing what was to come.
“That’s what they want you to believe,” he said. “Who is they?” I queried. “The government,” he whispered, as if “they” might be listening at that very moment. “But didn’t Osama and some members of al Qaeda not only say they did it,” I reminded him, “they gloated about what a glorious triumph it was?”
“Oh, you’re talking about that video of Osama,” he rejoined knowingly. “That was faked by the CIA and leaked to the American press to mislead us. There has been a disinformation campaign going on ever since 9/11.”
Conspiracies do happen, of course. Abraham Lincoln was the victim of an assassination conspiracy, as was Austrian archduke Franz Ferdinand, gunned down by the Serbian secret society called Black Hand. The attack on Pearl Harbor was a Japanese conspiracy (although some conspiracists think Franklin Roosevelt was in on it). Watergate was a conspiracy (that Richard Nixon was in on). How can we tell the difference between information and disinformation? As Kurt Cobain, the rocker star of Nirvana, once growled in his grunge lyrics shortly before his death from a self-inflicted (or was it?) gunshot to the head, “Just because you’re paranoid don’t mean they’re not after you.”
But as former Nixon aide G. Gordon Liddy once told me (and he should know!), the problem with government conspiracies is that bureaucrats are incompetent and people can’t keep their mouths shut. Complex conspiracies are difficult to pull off, and so many people want their quarter hour of fame that even the Men in Black couldn’t squelch the squealers from spilling the beans. So there’s a good chance that the more elaborate a conspiracy theory is, and the more people that would need to be involved, the less likely it is true.
Why do people believe in highly improbable conspiracies? In previous columns I have provided partial answers, citing patternicity (the tendency to find meaningful patterns in random noise) and agenticity (the bent to believe the world is controlled by invisible intentional agents). Conspiracy theories connect the dots of random events into meaningful patterns and then infuse those patterns with intentional agency. Add to those propensities the confirmation bias (which seeks and finds confirmatory evidence for what we already believe) and the hindsight bias (which tailors after-the-fact explanations to what we already know happened), and we have the foundation for conspiratorial cognition.
Examples of these processes can be found in journalist Arthur Goldwag’s marvelous new book, Cults, Conspiracies, and Secret Societies (Vintage, 2009), which covers everything from the Freemasons, the Illuminati and the Bilderberg Group to black helicopters and the New World Order. “When something momentous happens, everything leading up to and away from the event seems momentous, too. Even the most trivial detail seems to glow with significance,” Goldwag explains, noting the JFK assassination as a prime example. “Knowing what we know now … film footage of Dealey Plaza from November 22, 1963, seems pregnant with enigmas and ironies—from the oddly expectant expressions on the faces of the onlookers on the grassy knoll in the instants before the shots were fired (What were they thinking?) to the play of shadows in the background (Could that flash up there on the overpass have been a gun barrel gleaming in the sun?). Each odd excrescence, every random lump in the visual texture seems suspicious.” Add to these factors how compellingly a good narrative story can tie it all together—think of Oliver Stone’s JFK or Dan Brown’s Angels and Demons, both equally fictional.
What should we believe? Transcendentalists tend to believe that everything is interconnected and that all events happen for a reason. Empiricists tend to think that randomness and coincidence interact with the causal net of our world and that belief should depend on evidence for each individual claim. The problem for skepticism is that transcendentalism is intuitive; empiricism is not. Or as folk rock group Buffalo Springfield once intoned: Paranoia strikes deep. Into your life it will creep …
Michael Shermer Interview - The Thinking Atheist Radio Podcast #17
My apologies if it has been posted before but I believe it warrants another read.