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Think Before You Invest: Motivations Behind Ponzi Scheme Investor Behavior
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Ponzi schemes lead to significant financial losses. Prior research has investigated motivations behind Ponzi scheme investor behavior, but only one study has used an experiment to simulate a Ponzi scheme to investigate investor behavior (Sadiraj & Schram, 2018). I expand on this research by designing and conducting my own experiment to test my hypothesis that both investment exclusivity and manager reputation lead investors to ignore potential investment risks and trust the promise of high investment returns. The results suggest that manager reputation and investment exclusivity are individually significant in explaining investor behavior, but investment exclusivity has a smaller effect on investor motivation.
An experimental study conducted to determine whether the reputation of the Ponzi scheme manager and exclusivity of the Ponzi scheme matter for investment in the Ponzi scheme