Aucbvax.6211
net.misc
utcsrgv!utzoo!decvax!ucbvax!wildbill
Thu Feb 18 11:58:41 1982
Pyramid Schemes
The savings bond deal is in fact a pyramid scheme. This hustle has been

around for an incredibly long time (in fact, I expect that any time now,
some archaeologist working in Sumeria or someplace like that will uncover
a tablet reading, "This is a chain tablet. Send 5 ephaphs of silver to
the person whose name is at the top of the list, and 5 ephaphs of silver
to the person whose name is at the bottom of the list. Take the top name
off the list and put your name on the bottom. Then send a tablet with the
new list on it to two friends. They will each send you 5 ephaphs of silver
and you will be even. When your name reaches the bottom of the list, you
will collect 320 ephaphs of silver!!"
     A modern version of the game involving what were known as "Pyramid
Clubs" was active in Northern California last year. You would go to a
Pyramid Club meeting at a friend's house, and for $100 or some similar
sum, you would receive a name list like the one in the chain letter

for another $100 sent to the person whose name was next to the top of the
list your friend got. The details varied slightly depending on where
the club started, but the principle was the same--when you started your
own club, you were at worst even, and when you got to the top of the list,
you began to rake in the chips.
     The problem with this game is that it grows exponentially among a
finite population, namely all people who haven't heard of the scam before.
This is all well and good if you get in early, as the first few layers
of people do indeed collect. However, by the time you get down even to the
tenth layer (these are the people who are going to pay off the fourth
layer of people in the pyramid), you need 2^10 people for that layer alone
even assuming only binary branching, and 2^11 people for the entire tree.
Since this number somewhat exceeded the entire adult population of the
Bay Area, people who didn't get in extremely early were only able to
recover their investment, and people who got in late were unable to
even do that, since everybody who was interested in joining a Pyramid
Club had already done so. The game died of its own weight just about the
time the cops were beginning to get interested in it.
     As usual, people who look for "Something for Nothing" usually wind
up with Nothing for Something instead.

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 Bruce Jones, Henry Spencer, David Wiseman.