Speaking of Robert Rubin: "The Optimal Design of Ponzi Schemes in Finite Economies"

This is a paper from 2002 that accurately predicted the events of the Great Financial Crisis, 2007 - 2009.
TL;dr: You don't play in the late stages of a pyramid or Ponzi scheme unless you know there will be a bailout.
From the Social Science Research Network:

Journal of Financial Intermediation, January 2003

Posted: 1 Oct 2002

Utpal Bhattacharya Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management

There are 2 versions of this paper

Abstract As no rational agent would be willing to take part in the last round in a finite economy, it is difficult to design Ponzi schemes that are certain to explode. This paper argues that if agents correctly believe in the possibility of a partial bailout when a gigantic Ponzi scheme collapses, and they recognize that a bailout is tantamount to a redistribution of wealth from non-participants to participants, it may be rational for agents to participate, even if they know that it is the last round. We model a political economy where an unscrupulous profit-maximizing promoter can design gigantic Ponzi schemes to cynically exploit this "too big to fail" doctrine. We point to the fact that some of the spectacular Ponzi schemes in history occurred at times where and when such political economies existed - France (1719), Britain (1720), Russia (1994) and Albania (1997).

Keywords: Ponzi schemes, bubbles, bailouts, moral hazard

This version is not available for download but the 1998 version is:
SSRN download page (33 page PDF)

Previously on Robert Rubin and his role in the financial disaster, the bank bailouts and the $126 million he pocketed from Citi when big C got bailed:
"The Economists' Hour, A Powerful New Economic History"