One might be able to explain the Nassim Taleb's “narrative fallacy” (see The Black Swan) partly by invoking Patrick Leman’s “major event, major cause” reasoning. Leman describes it thus in The lure of the conspiracy theory (New Scientist, 14 Jul 07):
“Essentially, people often assume that an event with substantial, significant or wide-ranging consequences is likely to have been caused by something substantial, significant or wide-ranging.
“I gave volunteers variations of a newspaper story describing an assassination attempt on a fictitious president. Those who were given the version where the president died were significantly more likely to attribute the event to a conspiracy than those who read the one where the president survived, even though all other aspects of the story were equivalent.
“To appreciate why this form of reasoning is seductive, consider the alternative: major events having minor or mundane causes - for example, the assassination of a president by a single, possibly mentally unstable, gunman, or the death of a princess because of a drunk driver. This presents us with a rather chaotic and unpredictable relationship between cause and effect. Instability makes most of us uncomfortable; we prefer to imagine we live in a predictable, safe world, so in a strange way, some conspiracy theories offer us accounts of events that allow us to retain a sense of safety and predictability.”
Taleb’s account of our inclination to narrate is psychological: “It has to do with the effect of order on information storage and retrieval in any system, and it’s worth explaining here because of what I consider the central problems of probability and information theory. The first problem is that information is costly to obtain. . . The second problem is that information is also costly to store . . . Finally, information is costly to manipulate and retrieve.” (The Black Swan, his italics, p. 68)
He goes on to argue that narrative is a way to compress of information. I suspect that the compression is related to extracting meaning, not the raw information. The long-term storage capacity of the brain seems is essentially unbounded, but our ability to manipulate variables in short-term memory is very limited, to about four concurrent items. Stories provide a useful chunking mechanism: they’re pre-remembered frames for relationships. There is a relatively limited number of story shapes and archetypical character roles (cf. The Seven Basic Plots) in which cause and effect is carefully ordered and given meaning.
Taleb comes even closer to Leman when he connects the narrative fallacy with the desire to reduce randomness: “We, the members of the human variety of primates, have a hunger for rules because we need to reduce the dimension of matters so they can get into our heads. Or, rather, sadly, so we can squeeze them into our heads. The more random information is, the greater the dimensionality, and thus the more difficult to summarize. The more you summarize, the more order you put in, the less randomness. Hence the same condition that makes us simplify pushes us to think that the world is less random than it actually is.” (The Black Swan, his italics, p. 69) As Leman says, “we prefer to imagine we live in a predictable, safe world.”