Abstract
Ponzi mechanism is a very simple pyramidal model that ensures unrealistically high and constant returns to its customers. How come? Early customers are paid off with the cash from new customers, attracted by the satisfaction of the old customers, and so forth until the chain collapses. Ponzi scheme has been used over and over, because it is simple, fits any growth dynamic context, and most of all works thanks to psychological factors. Indeed, it is all about trust and confidence, requiring charisma, reputation, and networks from the scammer, while investors will be naturally attracted because of this blind and senseless greediness that habits them. Madoff scandal relies on this model, and has become the most prominent financial fraud in history, because of the perfect combination of all factors. The purpose of this paper is to demonstrate that the entire world is driven by irrational behaviours that can only be explained by psychological dimensions of humanity. It will eventually lead to the demonstration that the society is doing the same things over and over, and expects different results.
