A study on discrete Ponzi scheme model through Sturm-Liouville theory (Q2113749)

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scientific article; zbMATH DE number 7488804
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    A study on discrete Ponzi scheme model through Sturm-Liouville theory
    scientific article; zbMATH DE number 7488804

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      A study on discrete Ponzi scheme model through Sturm-Liouville theory (English)
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      14 March 2022
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      Summary: In this paper, we introduce a second order self-adjoint difference equation which describes the dynamics of Ponzi schemes: a type of investment fraud that promises more than it can deliver. We use the Sturm-Liouville theory to study the discrete equation with boundary conditions. The model is based on a promised, unrealistic interest rate \(r_p\), a realised nominal interest rate \(r_n\), a growth rate of the deposits \(r_i\), and a withdrawal rate \(r_w\). Giving some restrictions on the rates \(r_p\), \(r_i\), and \(r_w\), we prove some theorems to when the fund will collapse or be solvent. Two examples are given to illustrate the applicability of the main results.
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      Ponzi scheme
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      difference equation
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      Sturm-Liouville boundary value problem
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      Green's function
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      discrete calculus
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      Charles Ponzi
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      investment
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      rate of return
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