Why Otherwise Intelligent People Fall For Network Marketing Schemes (MLM)

I've argued, at least with my peers and around my area, that we weren't properly taught what science is (I wasn't properly taught grammar either). There is another area I think that our population (perhaps the world) is weak in as well, and it's basically probabilities.

Here I speak to this weakness in regard to network marketing “schemes” which are basically comparable to our understanding of a pyramid scheme or a Ponzi scheme (although technically different depending on who we ask).

Network marketing or multi-level marketing (MLM) always has the claim that the system is not actually a scam. These “presentations” are accompanied with every single counter to any possible question that a skeptic might ask. In fact, it is far more efficient to just assume that there is no possible question to ask that can't be countered with a “legitimate” answer.

So where is the scam?

The scam is in regard to the scaling, which will always be complex to the extent that it is far better to ascribe potential success to the addition (accumulation) of probabilities.

In game theory, poker for example, we evaluate each situation by observing the risk/reward in relation to probability of success. If we risk 1 unit to win 2 (total) we are going to want to win at least 50% of the time.

What are the chances one is going to fulfill the requirements of a network marketing system?

It's not really something one can quantify is it?

There is not really a founded argument for success.

We can break this down further in regard to “scaling”.

Some systems work well at a low scale, but when we try to grow the system the system fails because the efficiencies do not always continue to be effective.

Some systems require you only get two other members to “sign-up”. Two members is easy, but of course they each must get two members, and their two members must get two members and so on.

Such a system SEEMS like it scales but it doesn't. It's ludicrous.

Think of this parable about a horse-shoer that charges some king a penny for the first nail, 2 pennies for the 2nd, 4 pennies for the 3rd, and so on....

At 30 nails the cost of shoeing a horse is ASTRONOMICAL.

So the question to ask an irrational person touting an irrational scheme, is 'Does this scale?” and “What are the probabilities associated with the investment?”

They can't answer the question, because if they could they wouldn't have fallen for the irrational trap in the first place.

Scaling and probabilities (gambling) should be taught in public schools (if we are to have public schools at all).