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A case study of the pyramid scheme in China based on communication network

Pihu Feng, Xin Lu, Zaiwu Gong and Duoyong Sun

Physica A: Statistical Mechanics and its Applications, 2021, vol. 565, issue C

Abstract: This paper discusses the structure and endogenous process of a pyramid scheme organization. While most previous studies focus on the operation mode of pyramid scheme and its destruction to social economy, we investigate the non-trivial microstructure and endogenous interaction within the pyramid scheme. By using the motif analysis and the exponential random graph model (ERGM), we conducted an in-depth study on the communication network of a specific pyramid scheme organizations. Through integration of the communication networks with the organizational hierarchical structure, we explore what is the typical structure of a pyramid scheme organization and how do people interact with each other in the organization. The results show that the pyramid scheme communication network is a sparse network and obeys a core–peripheral structure. In terms of personnel interactions, pyramid scheme communication network presents significant homogeneity, with minimal cross-community and cross-hierarchy interactions.

Keywords: Pyramid scheme; Social network; Exponential random graph model; Motif; Communication network (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:565:y:2021:i:c:s0378437120308463

DOI: 10.1016/j.physa.2020.125548

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Physica A: Statistical Mechanics and its Applications is currently edited by K. A. Dawson, J. O. Indekeu, H.E. Stanley and C. Tsallis

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