As any single person who has ever attended a cocktail party or family function can attest, it generally doesn’t take more than five minutes after exchanging niceties with someone in a relationship to hear the following words: “So are you seeing anyone?” After you mention that dating isn’t a priority at the moment and list such perks of singlehood as staying in one’s pajamas until 4:00 on a Saturday afternoon or binge watching a TV marathon, the next comment is invariably a nonsequitur: “Have you tried online dating?”
The logical response might seem to be to dump a bowl of homemade kale chips over the other person’s head. But while the idea of online dating is often bandied about as if it were some sort of universal romantic panacea, the annoying coupled person in this scenario is citing, perhaps unwittingly, a concept in economics known as a thick market. Paul Oyer, an economics professor at Stanford’s Graduate School of Business, has firsthand knowledge of this dynamic. Back in the dating market for the first time in 20 years after separating from his wife, Oyer joined an estimated 40 million Americans looking for love online.
Why is online dating a reasonable strategy? The goods may be odd, but the odds are good. Dating websites have thick markets of people looking for, well, dates. There is more market activity and liquidity. In Oyer’s new dating advice book, Everything I Ever Needed to Know about Economics I Learned from Online Dating , he draws other parallels between online courtship and the concepts he teaches his MBA students.
When it comes to dating, society as a whole could be considered a thin market. “Suppose that my soul mate was born, like me, in the 1960s,” he postulates. “Limiting myself to women who are still alive, and assuming that half of them have already met their soul mates, I have perhaps 200 million potential partners. If I meet two potential partners a day, there’s a 50/50 chance I will find my soul mate within a quarter of a million years.” Or, as the professor mused in an interview with Institutional Investor: “If I had to rely on the traditional thing of getting set up and doing the bar scene, I’d be a hermit.”
Oyer found that to have a fighting chance on OkCupid, Match.com and other dating websites users must obfuscate some personal stats, the same way companies might offer strategically incomplete data on stocks. Jaded investors and online daters alike may discount such public statements — a situation illustrative of a facet of game theory called cheap talk. For example, an online dater might use a photo from five years — and 40 pounds — ago. “If everybody knows that many people who claim to be ‘Athletic and Toned’ on Match.com are closer to the ‘A Few Extra Pounds’ category, then to claim ‘A Few Extra Pounds’ would mean one is actually significantly overweight,” Oyer writes. He also cites numbers given on OkCupid’s blog that show that four times as many users report making more than $100,000 a year than as demographic statistics would suggest.
As for daily routines of both singles and couples alike, activities such as food selection and going on a promising date, in economic terms bolster one’s utility — which is “just an economist’s way to keep score of how happy someone is,” says Oyer. “So I spend time on OkCupid in the hope that I will meet someone who will someday increase my utility.”
In his case, Oyer got returns on his investment. Proving his theories can beat the world’s most inefficient market, he is now dating a fellow Stanford professor he met on JDate.
