Robustness of multilevel network marketing plans under influenced quitting

Authors

Erika Fille T. Legara ⋅ PH National Institute of Physics, University of the Philippines Diliman
Marisciel Litong-Palima ⋅ PH National Institute of Physics, University of the Philippines Diliman
Caesar A. Saloma ⋅ PH National Institute of Physics, University of the Philippines Diliman

Abstract

Using agent based modeling, two of the most common types of multilevel marketing (MLM) compensation plans are compared; the unilevel and the binary. The robustness of the compensation plans under quitting among recruits is investigated. Random quitting is compared against socially-influenced quitting. Socially-influenced quitting depends on the degree of social separation between two agents and is implemented in two ways: the probabilistic and the "domino-effect"0 influential quitting. To compare the MLM robustness, we compute for the dissolution threshold, which is the minimum percentage at which social quitting leads to complete breakdown of the network, and the decay rates. In this paper, the obtained dissolution thresholds for both the unilevel and binary plans are the same, 0.787. For the domino-effect, it is shown that unilevel compensation plan dies out faster than the binary by comparing their decay rates, r = 0.5501 and r = 0.4490, respectively. We conclude that the binary compensation plan is more robust than the unilevel plan when social quitting is considered as a given behavior among agents involved in multilevel network marketing schemes.

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Issue

2005: Proceedings of the 23rd Samahang Pisika ng Pilipinas Physics Congress

Article ID

SPP-2005-2C-03

Section

Complex Systems

Published

2005-10-26

How to Cite

[1]

EFT Legara, M Litong-Palima, and CA Saloma, Robustness of multilevel network marketing plans under influenced quitting, Proceedings of the Samahang Pisika ng Pilipinas 23, SPP-2005-2C-03 (2005). URL: https://proceedings.spp-online.org/article/view/SPP-2005-2C-03.