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Olivia is a typical romantic heroine. A young wealthy and beautiful Countess, she is the most natural and obvious choice for Duke Orsino, yet Olivia has no interest in him or any of her other suitors. Rather than say so, she instead reveals that she is in mourning for the death of her father and brother. Her decision to remain in seclusion for seven years is in keeping with the image of a romantic heroine, someone who is cut off from the rest of the world. The decision is also a dramatic device used by Shakespeare as a part of the main plot. In fact, one could see this as a cleverly devised guise not only to protect her from undesirable suitors but to attract attention to herself.
Olivia is part of the love triangle yet she is not in love with the Duke. "Your lord does know my; I cannot love him," (I, V). Thus she uses the dramatic device of seclusion to keep away the persistent messages of love sent by the Duke, "If it be a suit from the Count, I am sick, or not or not at home, what you will to disguise it." (I, V). It, however, becomes an obstacle for her when she finds herself falling in love with Viola. She has to find plausible reasons to meet Viola again and again. Ironically it is Viola's successful attempt at breaking down the barrier created by this dramatic device that brings about a meeting of Viola and Olivia. It will also lead to the complications that arise in the play.
In keeping with the romance tradition, Olivia's love for Viola/Cesario is unrestrained and passionate. It becomes the single purpose of her life, making her forget her decision to live in seclusion and what had started as a mere interest in Viola turns into passionate love - "a headstrong potent fault." She is alternately dignified and humble with Viola/Cesario: "By maidhood, honor, truth and everything I love thee so." (III, 1) she declares. She goes against all the norms of conventional courtly behavior by rejecting the proposal of the Duke, and falling in love with his messenger instead.
Olivia serves as a foil to Viola's character. Though there are similarities between the two characters - both have lost their brothers and are alone in the world - the contrast is essentially in their attitude towards the person they love. While Viola's love for the Duke is deep and steadfast, Olivia's love for Cesario/Viola is passionate and impetuous, and very often in conflict with her dignity. It lacks depth, therefore she is able to transfer her affections to Sebastian without any hesitation, and accept Viola as a sister. Olivia is an essential part of the main plot, and a study in contrast with Viola.