Question

Imagine that you are a reader of a newspaper that has a section that allows ‘letters to the editor.’ (This is where readers are able to write and submit a short article arguing for some point of view). Three such hypothetical letters are below. Imagine that you are writing a response to these letters. Write a response in which you use your social psychology knowledge to argue against the letter writer.

(2) How anyone could have been fooled by Edward Fresno’s money-making program is beyond me. These are supposedly intelligent people who joined this group (cult is more like it!), who were promised to make millions of dollars. What a scam it turned out to be when it was discovered that the whole program was a pyramid scheme! There have been a lot of explanations for how this occurred – for instance, how Edward Fresno was a charismatic person who enticed these people by offering them gradual rewards for being part of the group, or how these people were isolated from others who were not part of the group and thus came to reach really poor decisions because of the lack of outside criticism – but let’s look at the facts. These people had to give up everything to join this group – how could an intelligent person come to enjoy being part of a group like that? How could this Edward Fresno individual persuade intelligent people? Obviously these people weren’t that smart. Anyone with half a brain could have seen years ago that this was a scam! -Josh M. Grant

Answer 1

Pyramid scheme involves the investment of money of people in some form of a scheme with return interest benefits for the amount of years the money is invested. It includes the investment in three levels namely level-1, level-2 and level-3. The level-1 includes the person or the head who has started the scheme and level-2 includes the people who work under him and collect the money from people in the society to be invested with return benefits in the form of interests and these people are included in level-3 of the pyramid. The head invests money in some private share or gambling and gets double the amount of money back if the shares in the market are successful or if the gambling game is successful. Many people get trapped in such schemes by investing the money of people who evade disclosing their money in banks. If the scheme is successful the entire money is returned with huge interests but it can lead to fraud also as people can lose money if the investor loses money in shares due to the crashing of the market.

The number of participants increase leading to large number of risky investments and loss of money in illegal investments. Many common people in the society get trapped and it even targets intelligent people in the society.