1. A person who is easily swindled, deceived or coerced, persuaded, etc.
2. A person upon whom the blame for something falls; scapegoat; fall guy
3. A person who is the object of a joke, ridicule, or the like
This word was first attested in 1889 and its origin is uncertain. As a colloquialism, it's older than its first attestation, as evidenced by the quote itself:
A party of minstrels in Boston, about twenty years ago, had a performance...When the pedagogue asked in a rage, 'Who did that?', the boys would answer, 'Patsy Bolivar!'...The phrase...spread beyond the limits of the minstrel performance, and when a scapegoat was alluded to, it was in the name of 'Patsy Bolivar'...the one who is always blamed for everything. ~H.F. Reddall, Fact, Fancy & FableOne theory is that patsy was a diminutive of Patrick that was influenced by Italian pazzo ("crazy") or southern dialectal Italian paccio ("fool").
Perhaps the most famous patsy in American culture: