Review article
Why do people join and stay in pyramid and multi-level marketing schemes
Jurja Jakob
Abstract
Multi-level marketing (MLM for short) and pyramid schemes are two similar versions of the direct-selling model. Pyramid schemes are an illegal form of the direct-selling model because they rely on recruitment of people as a sole way to make a profit. By contrast, in MLMs one can, in theory, profit solely by product selling. However, the two operate in the same way and involve similar psychological processes. In a laboratory setting, significant demographic factors seem to be religiosity, prior experience, and higher perceived personal gain. However, in a real-life setting, factors such as gender, age, and education must also be considered. Extraversion, agreeableness, and outcome prediction have been found as personality correlates of the Big Five model. Some factors relating more to social processes seem to be the culture surrounding the business models and cognitive dissonance. The aim of this review is to analyze and explore these individual factors and examine how they influence the individual’s decision to join and remain in the business.
Keywords
financial fraud risk; MLM; pyramid scheme
Hrčak ID:
304044
URI
Publication date:
1.11.2022.
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