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Blinded by the Green: The JuicyFields Scandal and the Psychology of High Returns

Blinded by the Green: The JuicyFields Scandal and the Psychology of High Returns

In the face of slick marketing investors fell into a variety of psychological investment traps: FOMO, Herd Mentality, the Ripple Effect, Cognitive Bias Confirmation Bias and the Halo Effect. But behind it all lies that basic human instinct, greed, which is the driving force behind so many financial decisions.

Marlow D Guttman

8 May 2024 at 09:00:00

This analysis was first published a year ago on LinkedIn by Cannabis Consultant Marlow D Guttman.


In July 2022, the Berlin cannabis crowdfunding platform, JuicyFields, made waves when it abruptly halted operations, leaving hundreds of thousands of investors in a precarious position. The company had enticed its "e-growers" or investors with the prospect of yearly returns of over 100% by participating in the cultivation, harvesting, and sale of cannabis plants.


Read all of Cannabiz Africa's JuicyFields coverage here.


It has become increasingly evident that JuicyFields, to some extent, built its foundation on a Ponzi scheme. This approach uses funds from new clients to fulfill payment obligations to earlier investors. Furthermore, the company incorporated aspects of multi-level marketing, offering incentives to investors who successfully convinced others to join. The overall financial damage is still vague, with estimates ranging from millions to billions of euros. Boasting over 500,000 users primarily from Europe and Latin America, this scandal prompts an intriguing question:


Why do humans exhibit such greed, and why do they invest in companies that offer implausibly high interest rates?


The Irresistible Temptation of High Returns and the Complexities of the Human Psyche


The human psyche is inherently predisposed to seek pleasure and evade pain. This characteristic transcends the physical realm and permeates the financial sphere, where individuals are captivated by the prospect of high returns. 


These returns are perceived as a gateway to success, wealth, and an enhanced lifestyle. Greed, a powerful emotion deeply ingrained in human nature, serves as the driving force behind many financial decisions, both sound and unsound.


In the case of JuicyFields, the company masterminded a strategic and meticulously crafted marketing campaign to attract unsuspecting investors. This campaign relied on the persuasive power of influential social media personalities, appealing referral programs, and articles featured in reputable news media outlets to generate excitement around the company. These tactics, combined with the alluring promise of exceptionally high returns, created a persuasive illusion of credibility and trustworthiness that was difficult for potential investors to resist. The false image of legitimacy was further bolstered by fabricated claims of partnerships and agreements with leading players in the cannabis industry.


FOMO, Herd Mentality, and the Ripple Effect


Fear of missing out (FOMO) is a potent psychological factor that likely influenced many investors to channel their money into JuicyFields. FOMO often arises when individuals observe others reaping substantial profits from an investment, instilling a sense of urgency to join in and not miss the opportunity. This phenomenon can lead to a herd mentality, where people follow the actions of others, regardless of the associated risks. In turn, this creates a ripple effect, with an increasing number of people investing in a potentially fraudulent scheme, further exacerbating the situation.


Cognitive Biases: Confirmation Bias and the Halo Effect


Investors in JuicyFields may have also fallen prey to various cognitive biases, such as confirmation bias and the halo effect. Confirmation bias occurs when individuals selectively search for, interpret, and recall information that aligns with their preexisting beliefs or hypotheses. In this case, investors may have focused on the platform's positive aspects, such as the enticing returns or the company's seemingly legitimate marketing efforts, while disregarding any negative information or warning signs.


The halo effect, another cognitive bias, happens when people's overall impression of a person, company, or product is influenced by a single positive trait or characteristic. For JuicyFields, the promise of high returns may have overshadowed any concerns or suspicions, leading investors to overlook potential red flags.

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