Psychology of jokes

The reason why we laugh has been the subject of serious academic study, examples being:

Sigmund Freud's "Jokes and Their Relationship to the Unconscious".
Marvin Minsky in Society of Mind.
Marvin suggests that laughter has a specific function related to the human brain. In his opinion jokes and laughter are mechanisms for the brain to learn Nonsense. For that reason, he argues, jokes are usually not as funny when you hear them repeatedly.
Arthur Koestler, in The Act of Creation, analyzes humor and compares it to other creative activites, such as literature and science.
Edward de Bono in "The mechanism of the mind" and "I am right, you are wrong".
Edward de Bono suggests that the mind is a pattern matching machine, and that it works by recognising stories and behavior and putting them into familiar patterns. When a familiar connection is disrupted and an alternative unexpected new link is made in the brain via a different route than expected, then laughter occurs as the new connection is made. This theory explains a lot about jokes. For example:
Why jokes are only funny the first time they are told: once they are told the pattern is already there, so there can be no new connections, and so no laughter.
Why jokes have an elaborate and often repetitive set up: The repetition establishes the familiar pattern in the brain. A common method used in jokes is to tell almost the same story twice and then deliver the punch line the third time the story is told. The first two tellings of the story evoke a familiar pattern in the brain, thus priming the brain for the punch line.
Why jokes often rely on stereotypes: the use of a stereotype links to familiar expected behavior, thus saving time in the set-up.
Why jokes are variants on well known stories (eg the genie and a lamp): This again saves time in the set up and establishes a familiar pattern.
Laughter, the intended human reaction to jokes, is healthful in moderation, uses the stomach muscles, and releases endorphins, natural happiness-inducing chemicals, into the bloodstream.

One of the most complete and informative books on different types of jokes and how to tell them is Isaac Asimov's Treasury of Humor, which encompasses several broad categories of humor, and gives useful tips on how to tell them, who to tell them to, and ways to change the joke to fit your audience.