Why we believe that bad things only happen to others: the optimism bias
People believe that bad things happen less to them than to others. They are therefore too optimistic – even when there is actually no good reason for it. In the case of fraudulent MLM schemes, it works like this:
A trusting investor thinks: ‘The cases of fraud I hear about may happen to others, but certainly not to me. My investment will be successful!’ Instead of taking a close look or taking warning signs seriously, they rely on the hope that everything will be fine. Even when the first losses become apparent, they remain optimistic and hold on to their investment because they believe: ‘It will still be worth it!’ The problem is that this exaggerated optimism often leads to more money being invested – and the losses are all the greater in the end.
Fraudsters exploit this cognitive error by repeatedly fuelling hope: they promise big profits ‘soon’ or explain that it is just ‘a phase’ that will be overcome.
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