Speaker
Description
Ponzi schemes are gradually getting into competition with regular investment institutions due to their outrageously high interest rates. People have embraced these schemes in spite of the much higher risk involved compared with regular investment companies. In order to understand the dynamics of the spread of Ponzi schemes in a given population, an epidemiological model is set up, precisely, the SIR model. The local stability analysis of both the disease free' and theendemic' equilibria are performed. Interest rate is incorporated into the model as an exponentially distributed random variable yielding the probability of not being `infected' and the related probability of recovering an investment. The study demonstrates that there exist a threshold value of the interest rate, above which the scheme is bound to collapse and below which it persists in the population. Numerical Simulations were also evaluated in order to investigate the effect of the interest rate variations on the sustainability of the scheme and did support the analytical results of the model.
Summary
In this research, Ponzi schemes was viewed as an infectious disease, due to the chaotic nature of the scheme. Hence, the dynamics of the spread of Ponzi scheme was studied using an epidemiological approach.
