Pyramid Scheme
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"First, let me assure you that this is not one of those shady pyramid schemes you've been hearing about. No sir. Our model is the trapezoid!"
- The Simpsons, "I Married Marge"

Basic Information

A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, often without any product or service being delivered. Pyramid schemes are illegal in many countries, and are often run by con men. Traditionally the founder of the pyramid recruits a number of marks, who pay him a membership fee and are then expected to enrol marks of their own, forwarding the majority of their fees to the founder, these marks then recruit in their turn and the founder remits some of his gains as payouts for those who are successful in getting others to join the pyramid. as the name implies, the number of people at each level grows geometrically and whilst the founder and sometimes the next few layers can make a decent return, pickings soon become scarce and quite quickly a layer gets left holding the idiot ball with fees paid and nothing to show for it. ("Investors" can also be locked in by a sense of joint venture - real or imagined - by sunk costs, by exit fee or eve n outright violence and intimidation.

The main difference between a Pyramid Scheme and more mundane multi-level marketing businesses is that a Pyramid Scheme offers no products for sale, or makes the bulk of it's money via enrolment fees or gifting as opposed to the sale of product. Even a legitimate MLM business requires geometric growth at each level of the structure, and the lower tiers will eventually find it very difficult to acquire new customers or recruit new sellers below them.

See Also


1. Wikipedia article - Includes more thorough explanations of why MLM and Pyramid Schemes are unsustainable.

Game and Story Use

  • In a fantasy setting, an Adventurer's Guild could be set up that's based on a Pyramid or MLM scheme.
    • Each person recruits 4 new adventurers below them, and outfits them for a dungeon expedition, and in exchange gets 60% of the treasure they bring back.
      • The new recruits benefit by being supplied with new weapons and armor, and possibly having promises of resurrection magic being paid for by the recruiter.
      • The recruits / adventurers themselves gain only a 10% share (each) of the treasure liberated from the dungeon.
    • Of course, the real money is in recruiting new adventurers below you. Once you've built up enough money to arm and resurrect a party of 4 adventurers, it'll be safer and more lucrative to do so.
    • This could be used to good effect by a group of players (and GM) who prefer low-level campaigns to higher-level games. At a certain stage you retire the veteran characters, and make up the team of neophytes that they recruited. The characters would always be low- to mid- level, but the campaign could maintain continuity for years.
  • These schemes have taken down whole nations: discussion of various social security systems aside, post-communist Albania was devastated by a particularly extensive pyramid scheme which was exacerbated by a degree of naivete amongst people who had previously had very little experience of free-market economics.
  • Angel featured a pyramid scheme for vampires, revolving around capturing living humans to be kept as livestock.
  • A pyramid of magical energy transfers could be set up, letting the person at the apex absorb a great deal of power at the expense of those lower down.
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