Who Else wants to be Rich?
One of the typical deceptive practices used by business opportunity sellers use is to parade the "big earners" out for display. The FTC has proposed several ways of dealing with the deceptive marketing practice. But since the late 70's Amway has been forced by the FTC to state that over half Amway recruits make nothing and the rest average $64/month. I don't know how current these numbers are, but it doesn't seem to make a difference to Amway's ability to recruit.
Let us suppose that that the above numbers were accurate: 50% of Amway recruits make nothing and the average earnings of the other 50% are $64/month. Why could Amway continue to sell this opportunity? Is there some simple cognitive failure among recruits that accounts for them discounting or ignoring these earning claims?
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Remember that a Ponzi scheme works because we have very poor native induction skills. In the social world, we need to extrapolate from a very short time series, or small number of experiences. We simply don't get number of plays in the real world to make a statistically justified inference. We must make decisions based on the short run. The American philosopher, Pierce, described this inference pattern as abduction. Neither formal nor statistical. Unfortunately, in the Ponzi scheme we do need a longer run to make sure that it is not our capital that is being returned to us.
The similar flaw in reasoning in the MLM scheme is for the participant to think: well, I only need to sign up 5 of my friends to break even. Surely, I can do that. Why then yes, I must plunk down my silver level fees.
Unfortunately, the 5 friends that you know and hope to recruit realize faster than you do, that the 5 recruits that they have to find exclude you and your friends. Too bad you didn't put yourself in their shoes.
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