Pyramid Scheme conceptual question

Discussion in 'Physics & Math' started by Secret, Sep 18, 2014.

  1. Secret Registered Senior Member

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    So basically, I received a scam which a friend of mine pointed out is a Herballife pyramid scheme
    As my memory of what a pyramid scheme is vague, I refresh my memory by reading about it briefly

    http://en.wikipedia.org/wiki/Pyramid_scheme

    Now I understand how its geometric series like nature result in the scheme to collapse very quickly (since the no. of recruits > global population)

    But like anything tied to maths, that caused me to have wild thoughts

    If the no. of recruit=1, will it still be a pyramid scheme (hence unsustainable) as when a geometric series with a ratio of 1, it does not grow exponentially, but linearly?
     
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  3. cosmictraveler Be kind to yourself always. Valued Senior Member

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    Eventually it will collapse but that could take a very long time as Bernie Madoff has shown.
     
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  5. lpetrich Registered Senior Member

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    A pyramid scheme depends on having new recruits. When it runs out of recruits, it collapses. So it's limited by the number of possible recruits that it can have. That limit is independent of how it grows.

    Let us also see what growth rate is nicest for its existing members. Let's suppose that each new recruit brings in about M dollars or euros or whatever, money that is paid to existing members as administrative expenses, costs of training seminars, or whatever. Thus, each existing member receives M*N(new)/N(existing). So to keep the income up, N(new)/N(existing) must be constant, something that implies exponential growth.
     
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  7. Syzygys As a mother, I am telling you Valued Senior Member

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    A linear scheme is not a pyramid scheme. A linear scheme is a paying it forward kind of thing and you can not get rich if the incoming and the outgoing cash are the same...
     
  8. Stryder Keeper of "good" ideas. Valued Senior Member

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    One variation of "Legal" pyramid scheme which doesn't involve money was one that involved chain letters. (This was back when the world had people writing to each other with pen pals and a guy in a van had to deliver the *physical* mail.)

    The system used was that a person would send a letter to 5 people. The first letter would contain 6 copies of the same postal address, with the instructions to prep-end the address list with your own address and remove the bottom one before sending a copy of the addresses to five other people.

    The problem was:
    • Some people are lazy they don't want to write
    • Some people like their privacy
    • Some people thought it was dumb
    • Sometimes you'd get the same group of people trying to drag you back into the same pyramid.
    • Some people might send the letter to 20 people out of greed, again increasing the chances of most people having already been asked to join.
    • The posty hated people that managed to get everyone writing to each other since *physical* mail weighs.

    This variant attempted to negate collapse by keeping the number finite rather than exponential. (The pyramid starter would be limited to the same potential number of letters as anyone else.)

    Similar online versions have occurred over the years like the various "Send this email to 5 friends for goodluck", right through to people on Facebook being conned into going to a survey site to fill out information so that someone else get's paid for the work. (Pyramids are just about someone milking everyone elses cash for nothing)
     
  9. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    Not if same people participate an unlimited number of times.

    One I liked had letter that gave instructions to go to address at top of list after dark and shit on the yard as 5 or so others would probably be doing while you were there. - That saved stress on the sewer system and fertilized your yard, same a dogs do.
     

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