Ponzi schemes in Brazil: what leads people to still invest in this fraud?

Purpose - Most scientific research has focused on understanding Ponzi schemes from the point of view of the schemes and their operators, based on qualitative analysis. This paper aims to analyze Ponzi schemes from the perspective of their investors, emphasizing behavioral aspects, which have been little explored in the scientific literature, especially in quantitative research. In this way, the authors sought to understand the effects of heuristics and cognitive biases in understanding investor behavior. Design/methodology/approach - A logistic regression was carried out with Brazilian investors, some of them participants in Ponzi schemes, who answered a structured questionnaire by means of a survey. Findings - The authors found that social pressures, overconfidence and deliberate ignorance lead to credulity, generating little risk analysis and the desire to make a lot of money quickly. Practical implications - Helping investors improve their levels of information through financial education and self-knowledge about their behavior. Contribute to the competent authorities in the search for improvements in the information displayed to investors. Social implications - Understanding the mechanisms used when making a financial decision from the point of view of investors in general, but especially those exposed to Ponzi schemes, has the mission of enlightening them about the importance of financial education and the weight of psychological factors so that they can reduce the effects of heuristics and analysis biases when faced with a financial decision. Originality/value - The basis of this work will be the inclusion of psychological variables and financial education, adapting existing models in an attempt to demonstrate the effects they may or may not have on mental accounting in the specific case of investors