I'm here because I'm interested in folklore. I strongly suspect that the vast majority, if not all paranormal and cryptozoological stories are actually manifestations of folklore-in-the-making. At the same time, I love the intriguing if remote possibility that a small number of cases could hold a grain of truth.
Take big hairy hominids, for example. We have tonnes of eyewitness testimony from loads of countries all over the world claiming experiences with bigfoot-type creatures.
The survival of one such unknown species may be a possibility, but the survival of so many in loads of different places, including Australia (which never even had primates before the arrival of man) just stretches the bounds of probability too far for the testimony to be believed. At least the bulk therefore, if not all of this testimony simply has to be bunk, by the rules of probability.
This makes me look for a better explanation for the observed behaviour of the "witnesses", and in this case, it appears most likely to me that we are simply seeing developing folklore.
People do readily lie when telling "ghost stories" and strange tales - I've seen people I know make up encounters and tell them as truth around a camp fire, for the social bonding effect that such storytelling has.
I even did it myself as a kid; I used to sit with my friends and discuss the half cat-half human I'd seen that lived behind the pub near our house and the cyclopic giant centipede that came at us from the darkness as we tried to explore a storm drain under our school - in the latter case, about three of us managed to convince ourselves we'd all seen the same thing - a single staring eye moving towards us out of the darkness.
With regards to eyewitness testimony in legal cases, most would acknowledge it is a highly flawed form of evidence here as well and usually needs backing up with plenty of objective evidence to obtain a conviction:
http://agora.stanford.edu/sjls/Issue%20 ... versky.htm
Whilst problems with eyewitness testimony in law generally revolve around the accuracy of the testimony rather than the honesty, eyewitness testimony of supernatural and fantastical events seems even more flawed to me, as we experience positive social pressures to make up interesting stories and present them as fact. After all, who wants to be the one sat around the campfire that is unable to impress the rest, when our turn comes?