The psychology of deception: exploring behavioral drivers of Ponzi investments

Firda Nosita, Moeljadi Moeljadi, Sumiati Sumiati, Kusuma Ratnawati and Javaid Ahmad Wagay

Journal of Financial Crime, 2026, 1-19

Abstract: PurposeThis study aims to examine the impact of social networks, greed and financial literacy on individuals’ decisions to invest in Ponzi schemes in Indonesia.Design/methodology/approachA quantitative analysis was used, based on an online survey completed by 385 individuals who had potentially invested in Ponzi schemes. The data were analyzed using Partial Least Squares–Structural Equation Modeling to test the proposed relationships between the variables.FindingsThe analysis revealed that all three variables: social networks, greed and financial literacy significantly influence Ponzi investment decisions. Social networks play the most prominent role by facilitating information spread through direct or indirect interpersonal connections. Greed motivates individuals to pursue high-return schemes despite known risks. Unexpectedly, higher financial literacy is positively associated with Ponzi investment participation, suggesting that financially literate individuals may be overconfident in their ability to manage risk.Practical implicationsThese findings suggest the urgent need for targeted public education and awareness campaigns. Policymakers should consider generational approaches to financial literacy that address both knowledge and behavioral biases. Preventive measures should focus not only on increasing financial knowledge but also on addressing emotional motivations and social influences.Originality/valueThis study contributes to the understanding of psychological and social factors influencing fraudulent investment decisions. It highlights the paradox that financial literacy alone may not prevent individuals from falling prey to Ponzi schemes.

Keywords: Social networks; Deception; Greed; Ponzi investments; Investment Fraud (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfcpps:jfc-11-2025-0400

DOI: 10.1108/JFC-11-2025-0400

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