The Role of Personality and Social Networks on Ponzi Investment Decision: A Review

Abstract

Introduction: Ponzi schemes are popular and increasingly sophisticated schemes to defraud people by promoting get-rich-quick fantasies. Many people take advantage of this kind of investment opportunity because of the promise of very high returns even without risk. Social media exposure, increasing lifestyle and the phenomenon of fear of missing out also encourage individuals to fulfill their needs and the opportunities to get rich in quick.

Objectives: The paper attempts to provide review of the role of an individual’s personality and social networks in shaping their willingness to join Ponzi scheme by linking the gullibility theory and theory of planned behavior. The paper is expected to provide ideas for further research on the role of personality and social networks in Ponzi scheme investment decisions.

Methods: To structure the discussion, a conceptual review of Ponzi and the related theory is made to enhance the understanding of supporting explanation of why people trapped on Ponzi. in addition, the paper provides the role of internet and social media as promotion media nowadyas. The last section refers to generation’s problem as one of the possible reasons why people fall prey in Ponzi.

Results: Personality traits as one factors in gullibility theory which can explain willingness to invest in Ponzi scheme. The motivation to join a risky investment are either internal or external pressure. Social networks may influence the decisions, particularly in today’s internet and social media environment. Generational differences mean different character, traits, motives and prreferences. It also relates to the way they view money, needs and wants.

Conclusions: Personality traits and social networks play a role in encouraging individuals to join risky investmet such as Ponzi scheme. Personality traits are also related to one’s and may depend on how their social networks encourage behavioral tendencies. Generation’s problem is another factor to what extent people willing to join Ponzi scheme. Empirical study on the role of personality traits across generations and social networks on Ponzi investment decisions should be considered as future research agenda.