Pyramid Scheme - Concept and Basic Models

Concept and Basic Models

A successful pyramid scheme combines a fake yet seemingly credible business with a simple-to-understand yet sophisticated-sounding money-making formula which is used for profit. The essential idea is that a "con artist" Mr. X, makes only one payment. To start earning, Mr. X has to recruit others like him who will also make one payment each. Mr. X gets paid out of receipts from those new recruits. They then go on to recruit others. As each new recruit makes a payment, Mr. X gets a cut. He is thus promised exponential benefits as the "business" expands.

Such "businesses" seldom involve sales of real products or services to which a monetary value might be easily attached. However, sometimes the "payment" itself may be a non-cash valuable. To enhance credibility, most such scams are well equipped with fake referrals, testimonials, and information.

The flaw is that there is no end benefit. The money simply travels up the chain. Only the originator (sometimes called the "pharaoh") and a very few at the top levels of the pyramid make significant amounts of money. The amounts dwindle steeply down the pyramid slopes. Individuals at the bottom of the pyramid (those who subscribed to the plan, but were not able to recruit any followers themselves) end up with a deficit.

Read more about this topic:  Pyramid Scheme

Famous quotes containing the words concept, basic and/or models:

    Obscenity is a moral concept in the verbal arsenal of the Establishment, which abuses the term by applying it, not to expressions of its own morality, but to those of another.
    Herbert Marcuse (1898–1979)

    It seems to me that our three basic needs, for food and security and love, are so mixed and mingled and entwined that we cannot straightly think of one without the others. So it happens that when I write of hunger, I am really writing about love and the hunger for it, and warmth and the love of it and the hunger for it ... and then the warmth and richness and fine reality of hunger satisfied ... and it is all one.
    M.F.K. Fisher (b. 1908)

    Friends broaden our horizons. They serve as new models with whom we can identify. They allow us to be ourselves—and accept us that way. They enhance our self-esteem because they think we’re okay, because we matter to them. And because they matter to us—for various reasons, at various levels of intensity—they enrich the quality of our emotional life.
    Judith Viorst (20th century)