The Most Audacious Scam In History

January 29, 2016

In October 1822, Gregor MacGregor, a native of Glengyle, Scotland, made a striking announcement. He was, he said, not only a local banker’s son, but the Cazique, or prince, of the land of Poyais along Honduras’s Black River.

A little larger than Wales, the country was so fertile it could yield three maize harvests a year. The water, so pure and refreshing it could quench any thirst – and as if that weren’t enough, chunks of gold lined the riverbeds.

The trees overflowed with fruit, and the forest teemed with game. Painting an exotic, Edenic vision of a new life abroad, his proposal offered quite the contrast with the rainy darkness and rocky soils of Scotland.

What Poyais lacked, he said, was willing investors and settlers to develop and leverage its resources to the fullest. At the time, investments in Central and South America were gaining in popularity, and Poyais appeared to be a particularly appealing proposition.

Scotland didn’t have any colonies of her own, after all. Could this not be a corner of the new world for her own use?

Would you have fallen for the scam? MacGregor was a master salesman – and when you consider the psychological underpinnings behind con artistry, it is little wonder that many people were indeed fooled.

Con artists have long recognised that persuasion must appeal to two very particular aspects of human motivation – the drive that will get people to do something, and the inertia that prevents them from wanting to do it. In 2003, two social psychologists, Eric Knowles at the University of Arkansas and Jay Linn at Widener University, formalised this idea by naming two types of persuasive tactics.

The first, alpha, was far more frequent: increasing the appeal of something. The second, omega, decreased the resistance surrounding something. In the one, you do what you can to make your proposition, whatever it may be, more attractive. You rev up the backstory – why this is such a wonderful opportunity, why you are the perfect person to do it, how much everyone will gain, and the like. In the other, you make a request or offer seem so easy as to be a no-brainer – why wouldn’t I do this? What do I have to lose?

They called the juxtaposition the approach-avoidance model of persuasion: you can convince me of something by making me want to approach it and decreasing any reasons I might have to avoid it.

According to Columbia University psychologist Tory Higgins, people are usually more likely to be swayed by one or other of the two motivational lines: some people are promotion-focused (they think of possible positive gains), and some, prevention-focused (they focus on losses and avoiding mistakes).

An approach that unites the alpha with the omega appeals to both mindsets, however, giving it universal appeal – and it is easy to see how MacGregor’s proposition offered this potent combination.

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