A couple of years ago, I learnt about "Six Degrees of Separation" when I was working on an MBA project. Basically, the claim is that any two people on average are 6 links apart from each other(friend of a friend ....6 times). It sounded pretty interesting to me.
Recently, I stumbled upon a case of a Fantasy Sports company called "FantasyDraft" using the idea of 6 degree referral program.Here's a video that explains how this works.
https://www.youtube.com/watch?v=_aA2tqel63w
On first glance,I did not understand how this is economically feasible.Hence, I decided to work on the math behind this program. I performed a Monte Carlo Analysis to evaluate the likelihood of loss due to this program. The result showed very little likelihood(about 3-5%).
The math behind the magical number in the video is this->It is the sum of this series 5+5^2+5^3...+5^6(Sum of a GP)
Would this work for other categories and why?I am trying to dig deeper.
You can find the excel sheet on the link below.
https://www.dropbox.com/s/apz71gejxxwu9uh/Six%20Degrees%20Referral%20%20Monte%20Carlo%20Analysis.xlsx?dl=0
Would love your comments and critique.
