Bernie Madoff used many of the principles in Cialdini’s book Influence: The Psychology of Persuasion to persuade investors to willing hand over nearly $50 billion dollars in one of the biggest Ponzi Schemes ever seen in the United States. He used behavioral psychology to influence people and his manipulation of others yielded huge returns for decades.
Madoff helped to create the NASDQ and served as its chairman. Madoff had also been in the investment business since 1960. All these credentials hung on Madoff’s wall so to speak for all to see. People were naturally impressed. This is what is known as the Authority principle. This principle is credentialed based and Madoff was seen as an expert. People jumped at the chance to do business with him. The everyone believes/trusts an expert mentality was one of the regularly used items in Madoff’s bag of tricks.
Madoff utilized the Liking Principle by convincing those around him to invest. This was relatively easy for him to do as he was a member of a country club. The members of the country club had similar interests such as golf. Madoff discussed the investment opportunities while out on the golf course or over cocktails and because these men had similar interests/lifestyles they invested with his firm. Madoff was also Jewish and he used the liking principle to convince many in the Jewish community to invest. Madoff created a bond between his fellows which in turn created an atmosphere of trust and goodwill, this caused his peers to let their guard down and invest with Madoff. Many of his investors genuinely like Madoff and felt that he was doing them a favor by letting them in on the investment opportunity of a lifetime. This led to what is known as the Reciprocity Principle. Many of his investors felt inclined to tell their colleagues about their investments with Madoff. These colleagues would eventually end up investing with Madoff as well. Because of these principles the Social Proof...