Multilevel marketing: Pyramid-shaped schemes or exploitative scams?

• 成果类型: Article
• 署名作者: Antler, Yair
• 署名单位: Tel Aviv University
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE4890
• 发表日期: 2023-05-01
• 页码: 633-668
• 关键词: Multilevel marketing; pyramid schemes; speculative trade; misspecified models; analogy-based expectations; D84; D85; D86

摘要

Motivated by the growing discussion on the resemblance of multilevel marketing schemes to pyramid scams, we compare the two phenomena based on their underlying compensation structures. We show that a company can design a pyramid scam to exploit a network of agents with coarse beliefs and that this requires the company to charge the participants a license fee and pay them a recruitment commission for each of the people that they recruit and that their recruits recruit. We characterize the schemes that maximize a company's profit when it faces fully rational agents, and establish that the company never finds it profitable to charge them a license fee or pay them recruitment commissions.