Some highlights from the Wikipedia page
http://en.wikipedia.org/wiki/Conspiracy_theory
Christopher Hitchens represents conspiracy theories as the "exhaust fumes of democracy",[12] the unavoidable result of a large amount of information circulating among a large number of people.
Some psychologists believe that the search for meaning is common in conspiracism and the development of conspiracy theories, and may be powerful enough alone to lead to the first formulation of the idea. Once cognized, confirmation bias and avoidance of cognitive dissonance may reinforce the belief.
Some historians have argued that there is an element of psychological projection in conspiracism. This projection, according to the argument, is manifested in the form of attribution of undesirable characteristics of the self to the conspirators.
A 2011 study found that highly Machiavellian people are more likely to believe in conspiracy theories, since they themselves would be more willing to engage in a conspiracy when placed in the same situation as the alleged conspirators.[52]
For some individuals, an obsessive compulsion to believe, prove, or re-tell a conspiracy theory may indicate one or a combination of well-understood psychological conditions, and other hypothetical ones: paranoia, denial, schizophrenia, mean world syndrome.[54]
Where responsible behavior is prevented by social conditions, or is simply beyond the ability of an individual, the conspiracy theory facilitates the emotional discharge or closure that such emotional challenges (after Erving Goffman)[citation needed] require. Like moral panics, conspiracy theories thus occur more frequently within communities that are experiencing social isolation or political dis-empowerment.
Michael Kelly, a Washington Post journalist and critic of anti-war movements on both the left and right, coined the term "fusion paranoia" to refer to a political convergence of left-wing and right-wing activists around anti-war issues and civil liberties, which he said were motivated by a shared belief in conspiracism or shared anti-government views.[citation needed]
In a 2009 article, legal scholars Cass Sunstein and Adrian Vermeule considered appropriate government responses to conspiracy theories:
What can government do about conspiracy theories? Among the things it can do, what should it do?
We can readily imagine a series of possible responses.
(1) Government might ban conspiracy theorizing.
(2) Government might impose some kind of tax, financial or otherwise, on those who disseminate such theories.
(3) Government might itself engage in counterspeech, marshaling arguments to discredit conspiracy theories.
(4) Government might formally hire credible private parties to engage in counterspeech.
(5) Government might engage in informal communication with such parties, encouraging them to help. Each instrument has a distinctive set of potential effects, or costs and benefits, and each will have a place under imaginable conditions. However, our main policy idea is that government should engage in cognitive infiltration of the groups that produce conspiracy theories, which involves a mix of (3), (4) and (5).[65]