Putting Bernie Madoff On The Couch - TIME

While it is not a finance article per se, it is interesting and relevant for any class discussion on the Madoff case specifically and many frauds more generally. Especially since it does not fit normal (i.e. rational) economic models.

Putting Bernie Madoff On The Couch - TIME:

"No matter how grand your ill-gotten Bentley or your cooked-books villa, they have to be hard to enjoy when you know that at any moment the jig could be up....

A Ponzi scheme — as anyone smart enough to engineer one knows — is a plan that is uniquely without an exit strategy. It requires a constant infusion of new investors to pay off a growing body of existing ones, and ultimately it becomes impossible to find enough suckers. When that happens, the scam collapses. Sure, you could always flee the country before the roof caves in, but many scammers don't and Madoff famously didn't. The reason lies in the personality — or, more accurately, the personality disorder — that drives them to such frauds in the first place.

Forensic psychologists studying Madoff-type minds start with the usual menu of personality disorders, particularly narcissism. "These people get real enjoyment from doing what they do," says forensic psychologist Michele Galietta of John Jay College of Criminal Justice in New York City. "They feel good pulling the wool over other people's eyes."