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Why is it that just hearing a rumor, even if it's false, can strengthen people's belief in it?
It's the familiarity heuristic. Hearing a false rumor, especially if you hear it repeatedly, makes you more familiar with the rumor. All other things being the same, we seem to use a rule of thumb "if it sounds familiar, it is more likely to be true." Again, this finding should give us cause for a sober pause. What we hear often may in fact seem more plausible simply because we hear it often.
What kind of rumors tend to be the most harmful?
Rumors that foster conflict between groups are quite damaging. Racial rumors that lead to dehumanizing of other groups of people fall into this category ("group X eats humans" or "has cheated the majority"). Rumors that foster distrust between groups also belong here. More spectacular are the many rumors that spark riots in conflict-ridden situations: a civil-rights era government commission found that more than 65% of riots were set off by rumors.
Do you have some historical examples?
Sure, here are a few: In Sydney, Australia, a riot was sparked one summer day in 2004 by the rumor that an aboriginal boy on a bicycle had been chased by police and died after he was tragically impaled on a spiked fence; the rumor incited a group of 200 youths to throw home-made explosives at police, 40 of whom were injured in the melee. The late Saddam Hussein regularly spread rumors to discourage resistance to his dictatorship. In light of this, rumors that he possessed weapons of mass destruction may ironically have first originated from Hussein himself, as well as Hussein's opponents (like Ahmed Chalabi and other Iraqi defectors) who desired U.S. assistance in toppling him.
How do online rumors and gossip differ from traditional water-cooler gabbing?
We've found that Internet rumor discussions tend to follow the same "sense-making" path that face-to-face interactions do: People bring the rumor to the group, they set forth hypotheses and provide information, opposing camps sometimes arise, the hypotheses are evaluated, and either a consensus is achieved or the group splinters on this point. Online rumor can travel faster and farther than the office water-cooler circle; this has implications for the rumor's accuracy. If discussion is active and people of diverse opinions engage in it, the rumor stands a fair chance of becoming accurate. If, on the other hand, the rumor tends to circulate only among like-minded people, accurate rumors seems less likely to emerge.
The structure of the Web, however, doesn't typically lend itself to diverse discussion. Research has shown that liberal blogs are overwhelming hyperlinked to other liberal blogs, and that conservative blogs are overwhelmingly hyperlinked to other conservative blogs. Very few cross-links exist. This is thought to explain in part the emergence and survival of ideologically fueled rumors. For example, in the rancorous 2004 Presidential election, the same false rumor that a candidate had mistakenly quoted the Biblical verse John 16:3 as his favorite Bible passage — thus revealing hypocrisy about his being a believer — circulated about both John Kerry and George W. Bush. Presumably, the Kerry version flourished in the conservative blogosphere, and the Bush version gained traction in the liberal blogosphere. Each side has its own echo chamber.