Looking for a Valentine: A Directed Search Model with Search Frictions

So you’re in your thirties, gifted, energetic, romantic and all that, yet somewhat disconcerted with the thought that the people you have fallen for recently have invariably turned out to be “involved with a half-sibling”, “self-absorbed egomaniacs”, “the emotional equivalent of a sack of potatoes” or “die-hard Republicans".

And as your flustered mother pleads “Fine about the potato.. but what’s wrong with Republicans?!!”, you rush to me for some real advice. An economist’s advice! So here we go… My 2009 Valentine’s Special!

The search for a soulmate is a process best captured by the so-called “search models” that economists use to answer burning questions about the labor market. No, I’m serious… Check this out:

Why do the unemployed sometimes choose to stay unemployed, e.g. by turning down job offers? What determines the length of time a person will stay unemployed? How can we have both unemployed workers and unfilled positions at the same time? Importantly, can we do anything to make the search process more efficient and increase welfare?

See? All you have to do is replace “unemployed” with “single”! In fact that’s exactly what I’m going to do, to see what these models tell us.

So say you’re that single, gifted, romantic and “all that” individual and you’re looking for “The One”. Beauty is in the eye of the beholder, of course, so “The One” can be anything from “romantic and caring” to “intellectual genius” to “filthy rich” to "Matt Damon" (/"Scarlett Johansson”). More often than not, it can also be an abstract concept.

But while you’re looking, life as single doesn’t exactly s**ck… there is a certain “utility” in those wild weekends in Vegas after all. Call it singles’ bliss.

Every now and then, say N times a month, a guy (/woman) calls you up to ask you on a date. [OK, for simplicity I’ll stop this man/woman thing and focus on a woman’s perspective. Guys, just replace everything with “Scarlett Johansson”!]

Anyway, so you think “I might as well” and off you go to “sample” the offer. A while later you’re done with sampling (and vice versa) and you render your verdict: “Self-absorbed!” “Sack of potatoes!” “Fun, but not quite…”

So here is the dilemma… You can either say “I do” and advance to a life of “married bliss, but not quite;” or you can press “delete” and move on, albeit at the cost of yet more searching, more samplings, more verdicts!

Search models have something to say about which one you’ll go for. It boils down to this: The more impatient you are to find the“one”, the more likely you accept. In contrast, the more picky you are, the more likely you remain single!

(I suppose one doesn’t need a model to come up with that!)

Moreover, there are several factors affecting how picky you are: You’ll tend to be pickier if you keep being bombarded with offers; if you kind of enjoy your single’s bliss; or if you’re not that in a hurry to take the plunge.

So nothing wrong staying single then, right?

Well, yes and no. You see, in the world of economics, having unemployed workers and job vacancies at the same time is a missed opportunity to produce output! The dating world is similar, arguably…

I mean, some things in life are more fun a deux, from candlelit dinners, to games of scrabble, to that groundbreaking paper you can co-author! Let alone the obvious… Certainly that’s how your mother sees it, citing, in passing, reports that Republicans’ sex life is superior to that of Democrats. Either way, collective utility/value-added would increase, if more people found their match.

So what can you do?

Well, one option is to outsource the search process to a Planner—your mother for example—whose sole objective is to find you a partner, no matter what. She is certainly up for the challenge, so she rushes to her yoga class, asks around and, soon enough, she’s found your 97% match: A single guy in his thirties, gifted, romantic and all that, and a lovely individual, only Republican!

So the arrangement is made, the transaction goes through, “unemployment” reduced. Only that, as it turns out, you love to dance, he likes walks, you like fire, he loves snow, so you spend the rest of your life in the lukewarm in-between, devoting your most passionate moments to debates about the future of the Republican Party. That’s more or less the difference between “maximum employment” and “maximum welfare.”

Alternatively you can try resting on “market forces” to deliver you the best (welfare-maximizing) outcome. Only you might have to make a bit of extra effort.

For example, you may be receiving very few offers each month… or maybe your social circle is such that you only meet potatoes and egomaniacs. In which case you’d better take the extra step of “advertising” who you (really) are and what you (really) expect from the other side.

So, if you’re looking for a geek, say, you could start hanging out at the Apple store (a singles’ hotspot I am told)! Or, if you’re dying for an erudite, sensitive type, you could start frequenting happy hours for fans of Victorian poetry. Alternatively, you can move to Miami and groom yourself into a pretty bartender to get the Matt Damon type.

All this might be tiresome but it may well pay off. The other side now knows who you are, as well as your expectations and constraints. If they like what they see, they’ll make an offer, and one that you can’t refuse (else they wouldn’t make it in the first place). The deal closes, mother stays out of it, but all three of you happy…

…ever after? Well, there’s a catch: Even in this “best” world, partners can fail to deliver… your geek might have a knack for dismantling your appliances; your poet might be lousy at scrabble; and your Matt Damon might “see the light” and devote himself to a life of abstention and spiritual healing. It’s even conceivable (a minute possibility!) that you fail to deliver, being the rash, “delete-button” breed of your Facebook generation (and mine).

So what then… call up your mother?!!

Maybe.. though, before you pick up the phone, let me tell you one more thing.. According to those search models, being picky is a good thing.. It means that you’ll take your time, wait for “the” offer, end up much happier and, therefore, less likely to engage in “on-the-job search.” A desirable outcome for everyone!

Better yet.. If you do screw up, you’ll be at peace knowing it was you who made the choice!


Glossary: search models, on-the-job search, planner, Republicans, Democrats, potatoes

Plan B

It’s days like today when you wonder whether there is an urgent need for a Plan B. Markets are crashing, performance has s&#$ked, clients are screaming on the phone and, yes, people are now getting fired. No, not Lehman’s, nor Wachovia, nor those other guys across the street.. This time is our own very offices being cleaned up.

So I’m sitting with a colleague pondering on the alternatives… New York on $10 a day? Hmm, some brave ones have tried this before and lasted... a week! Not to mention of course that there’d be still a rent to pay, a doorman to tip and that irresistible key-lime mini cheesecake at Magnolia Bakery for $4.50 a piece!

Move to a Mediterranean isle and dedicate myself to producing olive oil? An enticing thought no doubt—staples should outperform in a global downturn after all. And then you have those heavenly beaches to relieve the stress after a wearying day of fierce tree-shaking to bring the olives down for collection… And those fig trees.. and the grape vines.. the fresh fish…

Just as I was pondering on my comparative advantage in tree-shaking, I get an email… “Maria Sharapova could be yours for a cool $10,000! ” No, no, don’t get me wrong! Here is the idea: If Maria Sharapova can auction herself and fetch a dinner date for $10,000, then…me...?

OK, I’m no Maria Sharapova… but, sorry, Maria Sharapova is no Chevelle either. I mean, let’s talk comparative advantage here. And I do mean comparative advantage. Sure, my serve is a joke. But dinner is not (all) about serving.. There’s that (home-made) olive oil, the figs, the table manners, the repartees… on the future of the dollar, no less! Besides, I look (almost) as good in a tennis skirt, thank you very much.

So now that we’ve established I can put a “dinner-with-Chevelle” up for auction, the burning question of course becomes what type of auction! Of course I want to fetch the highest price. But that’s not enough; I also want to make sure I get a fair price.

So here is where Sharapova (can I call you Maria?) got it wrong. Maria put herself up on an “ordinary” auction, whereby the buyers compete for whatever is up for sale—be it a Picasso painting or dinner with a blonde. Problem is, the price you end up getting will depend on who is in the pool of buyers at the time of auction.

For example, the auction’s winner might have been willing to pay far, far more than $10,000. I mean, she is a hottie, with long legs and the enviable title of ex-No.1 tennis champ, so arguably $10,000 falls way below her fair value Yet the guy got a bargain, likely because $10,000 already hit the bounds of the available competition’s “reservation price.

So here is my approach: A reverse auction! Very much in fashion after the Paulson bailout plan, it’s also a way to obtain a fair price. This is how it goes: I offer a price—obviously one in line with my sense of my intrinsic value. Other “sellers” offer a price too, for their own dinner-date. Of course, since each one of us does want to win, we won’t be making any extortionate offers--that is, way above our sense of market value. So potential buyers out there get the best price, and a fair one for that matter.

What?? You don’t trust my price? My sense of my own intrinsic value? Sorry, but if you trust Goldmans & co. using their obscure, in-house econometric models to put a price for the illiquid garbage they are about to sell to the government, surely you can trust my price for a “commodity” that is arguably far more liquid and certainly less toxic!

Wall Street men and women unite… there is a business opportunity here. And, by the way, I do mean dinner!



Glossary: auction, reverse auction, reservation price, olive oil, Maria Sharapova

Economists vs. Accountants: The Duel!

So I’m at this party, a cocktail one I suppose, since cocktails are being made by a couple of sultry Japanese hired help who giggle awkwardly upon mention of anything other than beer before rushing to the cocktail recipe book. I promptly decide to suppress my urge for a cucumber martini and opt for sparkling water instead.. no ice.

“Careful with that, I won’t take you home even if you begged,” says a voice behind me… male. I turn around. Not my type but hey! So we begin the usual party chitchat and within five minutes I know about his favorite martini, his 400 New York friends and his flashy BMW—“courtesy of my employer.” He? The sales rep for a major European cosmetics company. Me?

An economist, I say, expecting the typical bland look followed by a question on the stock market. Au contraire. What I get instead is a smartass laugh and… “a quote I just read, that an economist is someone who is good with numbers, yet lacks the personality to be an accountant!”

Ha ha.. NOT funny! I mean, don’t get me wrong, I would have laughed my head off had the “thesis” come from an economist. But anyone else??… It calls for a duel! Yet, stunned by the need to defend the… obvious (?), I stood there speechless. No… worse! “That’s right,” I said, “I spend my evenings playing with currency models while you’re trying night creams.”

Yes, that didn’t take me far. So that very night I decided to put aside my models for once and collect ammunition instead. Here it is:

1. The celebs: Let’s talk personality first. Think of Adam Smith, renowned political economist of “invisible hand” fame. David Ricardo, the precocious speculator, forerunner of “classical economics” and author of the theory of “comparative advantage.” John Stuart Mill, the influential liberal (and feminist!), free-marketeer and “utilitarianist,” advocating the maximization of (higher, intellectual forms of) happiness. Karl Marx, the father of communism; John Maynard Keynes, the prominent interventionist calling for an active government role as the solution to economic downturns. Joseph Schumpeter, the “creative destructionist.” Milton Friedman, the “freedom fighter.”

You’ve heard of these guys, right? Some of them? Scratching your head? Fine, just wait until you hear the accounting “superstars.” “Father of accounting” Luca Pacioli, a wandering Franciscan monk and author of the first written description of double entry bookkeeping (in 1494). Josiah Wedgwood, an 18th century potter(!), leading figure in the Industrial Revolution and “inventor” of modern cost accounting . The “legendary” Abe Briloff, “philosopher-king” of accounting today and ardent advocate of ethics, rectitude and high standards in the profession. Kenny G! (apparently an accountant before gaining global renown as the composer of ultimate cheese!). OK, I’m struggling here.. someone help?

2. The parties: Perhaps not the right benchmark for a good party, but economists’ gatherings are much (much) more exciting than those of accountants! Think Jackson Hole, the annual economic symposium and a prime occasion for spotters of policy wonks, academic nerds and Wall Street VIPs (paparazzi please attest!). The WTO Ministerials, where trade negotiations (purportedly) in the name of free trade have invariably raised the passions of thousands of hot-blooded protesters. Or Davos, the glitzy ski resort and seat of the World Economic Forum—an event so glamorous that even Angelina Jolie turned to an economics cause (the plight of refugees) to get an invitation. Now, just try to invite Brangelina to a conference of the American Institute of Certified Public Accountants! (A bit sneaky on my side perhaps, but this is a photo collection from what seems to be a typical accountants’ party!)

3. The scandals: One must admit, there have indeed been occasions when accountants have managed to steal the limelight: Accounting scandals! From Enron to Tyco to WorldCom to the many more instances of auditing negligence and/or abuses, accountants managed to grab their few “seconds” of front-page fame, together with the collective abhorrence of the victims, who saw their pension savings evaporate as the firms’ stock plummeted (and so did their 401k’s).

That said… economic “scandals” (we prefer to call them “crises”) have arguably been far more sensational! A fresh example is the subprime-mortgage crisis that has been unfolding in front of our eyes since last summer: The stock market losses that have accompanied it have been staggering: The market capitalization of the S&P500 Index has dropped by 1.7 trillion dollars—a rather hefty destruction of wealth, equivalent to 12 percent of America’s annual product (or GDP). Not to mention the wealth losses from the calamitous decline in home prices and the millions of those affected. Not really something to boast about, but, remember, the criterion here is headline-grabbing! Besides, as economists will tell you, “it’s not our fault!” Better yet.. What they’ll say is “I told you so!”.

4. Our “issues”: What would you rather daydream about… how to fill out your 1040 or how to spend that $600 tax rebate that the government might be mailing you, come May? Exactly! Unlike accountants, who will bore you with tax talk, economists prefer to banter about tax stimuli! A far more exciting topic, and it's not just semantics. Debates about the nature and magnitude of a tax stimulus package tend to be “electrifying,” as economic efficiency is traded off with political expediency: Temporary refundable tax credits or permanent tax cuts? Target everyone or just the lower-income groups? Aim at boosting consumption or investment? And, crucially, how big a package? Questions that, I’d say, dominate the details (however important!) of how to file short vs. long capital gains for tax purposes.

5. Our philosophy: The differences go beyond tax banter, however, to a more fundamental level. Think of the concept of “cost,” as simple as it sounds: Let’s say you go and buy an I-phone for 400 dollars. When I see you showing off your new gadget, I ask you “how much did it cost you?” and you say “400 bucks.” You know what I’ll say? I’ll say, “I’m sorry to tell you, but you were born to be an accountant!” You see, economists don’t think in terms of the “accounting cost” (those 400 bucks) but in terms of “opportunity cost,” i.e. the cost of missing out on (better) alternatives by spending your $400 on an I-phone—be it a fine dinner with a beautiful woman or a well-informed investment in the stock market. And when it comes to efficient allocation of our (scarce) resources, economists’ perspective wins this one big time!

6. Our profits: An extension of our differences over cost is our concept of “profit.” Accountants will measure profit as revenue minus cost, which, as I’ll show, is somewhat misplaced. Say I quit my job for a year and move down to Tulum to write a book about how thrilling the economics profession is. I live in a cheap beach hut, fish for my food and contain my entertainment to daily strolls through dilapidated Mayan temples, so that for $5,000 a year I can live like a (beach) queen. As “production” completes, an unlikely publisher emerges and the book gets published. You guys go out and buy three copies each (a fine investment!) and I end up making $50,000 out of the whole thing. Great job, you say, you made $45,000 of profit. No, my friend, I’ve just made an economic loss—for good or for worse, I could be earning a bit more spending my days (and nights) playing with currency models in New York.

7. The pick-up lines: Not convinced? Think dating! Once again, differences between accountants and economists are stark, with one fuzzy exception perhaps: Their respective pick-up lines, where I confess I’m having a hard time deciding the winner. I mean, would you rather go for “baby, let me withhold you!” or “I’ll be capital, you’ll be labor, you know the rest”? So I’ve decided to cheat.. only a little bit. Heard of John Nash? Famous mathematician and inventor of the Nash equilibrium, widely used in game theory? (You got it, the “Beautiful Mind!”). At the risk of receiving threat mail from mathematicians the world over for downgrading him to an economist (though he did share a Nobel prize in Economics!), I’ll borrow the line that he was made to say in the movie by screenwriter Akiva Goldsman to Alicia, his date and, eventually, wife (one of the funniest I’ve heard, but don’t get ideas, it only works for geniuses!):

“I find you very attractive. Your aggressive moves toward me indicate that you feel the same way. But still, ritual requires that we go through a number of platonic activities before we ….have sex. I'm simply proceeding with those activities. But in point of actual fact, all I really want to do is have intercourse with you as soon as possible.”

8. The dating: Despite their purported expertise in “dual dating,” accountants can be a pain to date. First of all, it’s darn hard to even find an accountant to date: Nobody admits to knowing an accountant, let alone being one (“no no, I’m a tax consultant”)! And in the rare cases when you do get hold of one, just try to set a date with him/her before April 16th. Taxes come first, it seems.

Economists, though.. oh no.. they won’t miss a single opportunity for a bit of making out (or, more accurately, the expectation thereof)! Whether in between meetings, in the taxi to the airport or pressed for time to deliver a critical presentation by 12 midnight, they will still make a move—“on demand” or not—even whilst you’re in the middle of discussing the impact of the Sarbanes-Oxley act on American competitiveness!

9. Après dating: So let’s say it all went well.. pick-up line worked, conversation rocked, move was accepted. What next? Given my limited experience in the field, I’ve decided to report the “gossip” as told by those at the frontier of the "professionals-in-grey-suits" dating scene. Accordingly, accountants do it “by the book,” though they often also do it “with double entry” and “without losing their balance!” Economists, on the other hand, do it “with interest,” will never miss “the bliss point” and, importantly, know how those “yield curves” respond! Your pick!

10. So… Economics or Accounting? You can tell, I’m running out of arguments! So in my quest for a proof as to which profession dominates, I decided to seek advice from Autoadmit.com, an online discussion group about college admissions and career choices and (according to itself) “the most prestigious college admission discussion board in the world.” Apparently, someone else had asked the question before me:

“Hi I'm trying to decide whether I want to continue pursuing my economics major or change my major into accounting. […] My main concern is the difficulty of getting a job as an economics degree after graduation , whereas with an accounting degree, it wouldn't seem too difficult. […] Can anybody help me with this decision? […] I’m very lost!”

I won’t “ruin” it by giving out the verdict. All I can say is keep on scrolling down, it gets better and better!

Glossary: accounting vs. opportunity cost, accounting vs. economic profit, invisible hand, comparative advantage, dual dating, beautiful minds.

Infidelity: Nature or nurture?

Infidelity is not usually the first thing that comes to mind at a friend’s wedding. Yet, that’s exactly what happened to me over the weekend. Bride and Groom were on the dance floor, grooving to the tunes of “Love is in the air...,” she in her super-slick Prada creation, he it doesn’t matter! Both exuded an aura of elation and unconditional devotion to each other, yet there was I, a few glasses of wine later, unable to rein in the following thought:

Evolutionary biology suggests that both men and women are “natural cheaters,” each for their own reasons. So what is it that makes two human beings commit to sharing the same bed, roof and room temperature for the rest of their lives?

Naturally, I sought an answer in Economics. After all, our partners are arguably a resource; a resource for offspring, obviously, but also (depending on the dynamics of a partnership) food, housing, inter-personal communication, emotional fulfillment and, quite often, sex. As such, they are critical drivers of our “utility”—our overall happiness and satisfaction. And economics is all about identifying the choices that will maximize our utility in the presence of constraints.

Sure enough, some economists out there have written studies about this. And even though those I’ve read are not among the most outstanding pieces of literature, they served to me as inspiration for dissecting the whole “infidelity vs. monogamy” trade-off. So here is my take.

Let’s talk evolutionary biology first (biologists, feel free to attack!). Accordingly, men and women are natural cheaters—a state of mind driven by their congenital mission to reproduce. Men will cheat as indiscriminately as possible to maximize the probability their genes are disseminated. Women will cheat in order to ensure their offspring are of the best quality, while also ensuring that they themselves are provided for—the underlying assumption being that the best “provider” may not necessarily be the man with the best quality genes.

Technically speaking, this means that the utility from cheating increases with the number of partners for both men and women —though in the case of men the extra pleasure out of an extra partner would tend to be much higher than for women (We’re still talking strictly biology!)

But more partners also mean higher costs. In the case of men, the cost has to do with monitoring: The higher the number of women you sleep with, the more difficult it is to monitor that the child they actually bear is yours (and remember, that’s the only thing you care for!). You see, women tend to hide their fertility cycles pretty well and—being the natural cheaters that they are—they may well give birth to someone else’s baby, which you will be asked to care and provide for. Not good!

In the case of women, the cost stems from their bodily limitations. The “production” of a baby takes nine months of “incubation,” and then a few years of breastfeeding, spoon-feeding and brain-feeding. This means that there are only so many babies a woman can produce during her lifetime—which, of course(!), means that there are only as many partners she can mate with. Effectively, this makes the cost of mating with any additional partner beyond this limited number infinite.

So if biology were the whole story, the equilibrium would look like this: Men would marry one (any) woman and monitor her closely, while going around town spreading their genes as widely as possible at little extra cost. Women would say “I do” to a man (any man) who would offer to be the “provider,” but then cheat on him with a better quality male to ensure their offspring makes it to Harvard. So both get their cake, and eat it too.

Now, economics introduces a dose of realism into the story. I mean, when you spot an attractive woman at a bar, you don’t really think “I feel like reproducing tonight.” Instead, you say “great legs” and reach for your condoms. Likewise, if I bump into Matt Damon, it’s not exactly my fertility cycle that will spring to mind.

Technically speaking, economics introduces new “arguments” in our utility and cost functions. No, not marital arguments; I’m talking about the different parameters that determine the levels of our utility and our costs when (sorry, IF) we cheat. Mathematicians like to call these “arguments.” So let’s see what they might be.

First of all, the utility from cheating does not only depend on the number of people one sleeps with. Statisticians have found it also depends on one’s age, in a way that resembles the shape of an “inverted U.” Meaning that you tend to cheat less when you’re young and innocent, more as life shows you otherwise, and less so again when you “mature.” Secondly, your utility from cheating also depends on the length of time you’ve been married… the seven-year itch and all that. The longer you’re married, the higher the perceived benefits of extra-marital affairs—especially for those of you who have missed out on Oprah’s invaluable sex advice.

What about the costs? Economics has a say here too, by better capturing the incentives for cheating. You see, in a day an age where contraception (God forbid!) is an option, my cost of sleeping around does not stem from my bodily limitations as a child-bearer. My costs are quite different. For example, if I’m married to a guy with the physical symmetry of Matt Damon, the financial resources of Bill Gates, the unconditional devotion of my mother and a Harvard education, my incentive to cheat on him will likely be low. Likewise, men are not the blithe sperm-disseminators biologists portray them to be. They do care! (right??)

So as an economist, I would introduce two more arguments in the cost function. The first is the relative “quality” of your spouse—how much better-looking and/or smarter your partner is compared to the average in your community. For both men and women, their cost of cheating would be expected to rise, the higher the relative quality of their partner.

The second parameter is the spouse’s ability (again, relative to the community average) to act as the “provider,” not necessarily of financial resources but, more importantly, of emotional support. (A professor of Family Studies and Human Development at the University of Arizona, Bruce Ellis, went as far as creating an index for that—the “Partner Specific Investment” index—or PSI). So the higher your partner’s relative PSI, the higher the cost of cheating on him/her.

Where does this leave us? How can we stop our partners (and ourselves) from cheating? The model above seems to offer a whole range of options, the relative appeal of which I leave up to you to decide. But here they are:

• Marry the Damon/Gates/mother combo (or the female equivalent depending on your predilections);
• Raise his/her cost of cheating by vowing to break your entire crockery collection on his/her head before kicking him/her out of the door;
• Relocate with your spouse to an uninhabited isle in Turks and Caicos to minimize the “community options” for both of you;
• If you’re a woman, wait till you’re at least 40, then marry a man who is at least 55—the ages where your respective “inverted Us” begin to decline (or so they say);
• Marry into Ivy League (ok, possibly Stanford, if you’re into the west coast thing). No, seriously. Some economists found that the probability of cheating decreases with the level of education, purportedly because a college degree enhances one’s ability to assess the costs of cheating.
• Accept cheating as an evolutionary necessity and, thus, good for human kind.

Alternatively, you can ignore economic models, tune into Oprah, and join me as I take another sip of wine and sing along: “Love is in the air.. everywhere I look around...”


Glossary: Resource, utility, constrained optimization, argument, cost function, seven-year itch, love.

Reality bites! Further readings...

Infidelity: It may be in our genes

The myth of monogamy: Fidelity and Infidelity in Animals and People

Even Harvard cheats!

An Economist's take on online dating

I had been out of the dating market long enough to have had comfortably forgotten about its time-consuming hit-and-misses and its exasperating “market failures.” But months now into Singlesdom, and with Valentine’s day promising yet another consolation box of chocolates by Mother, I said “Time for action!”

I have always been skeptical of online dating, for the simple reason that the whole concept reminds me of an IKEA catalog. But in light of my self-imposed urgency, I recently decided to conduct a little “field research” to see whether the World Wide Web can provide solutions to the failures of the dating market in the real world.

Now, let me clarify… I’m not talking about “failures” of the type: “Spending two years of your life with someone as emotionally deep as a sack of potatoes.” I mean, c’est la vie! It’s “market failures” I’m talking about. But what are these?

On Dates and dates: Think of the market of “Dates” (as in “hot guys and chicks”) similarly to the market of any commodity—say “dates” (as in “dry fruit”). There is supply, demand and a clearing price. Now, by virtue of my single-female status, I will focus here on male Dates and female prospectors, but I promise you the terms are interchangeable.

So let’s say you’re a single, 30+ male professional, 5’ 9’’, a few extra pounds, occasional back pains, middle-of-the-road, Yankees fan, etc etc; and you walk into a party full of women. Suddenly, heads are turning, hormones rising, females compete for your attention; you’re a hot commodity! Put plainly, your “price” has risen.

More generally, you can think of the price of a Date as the amount of effort needed to catch him. The latter includes anything from make-up, high heels, cleavage and botox to painful hours on the treadmill, training in courtship and table manners, even some college education.

The perfect world: Now transport yourself to an economist’s perfect world: The world of perfect competition! It’s beautiful world with many delightful features, of which I will mention three: First, there is “free entry” and exit. Remember that party a short while ago? Well, my friend, you no longer can enjoy a monopoly. The party is open and any Date can come in, check out the market, play, flirt, eat, shoot and leave.

This brings us to a second feature of this beautiful world: Dates have no market power. They can’t set their own price. So you, the 30+ male with the few extra pounds at that party can’t really tell me “Show me more cleavage or I won’t talk to you” because, sorry, that guy behind you (also 30+ with a few extra pounds) seems to be eyeing happily the 7 inches I’ve already revealed.

Critically, this is a world where information is complete and almost perfect. All females at the party know the rules of the game—what you’re up to, how you respond to fishnet stockings, etc. They also know what each and every male guest will want in exchange for a party chat. And they can figure out more or less what you’re worth: Incipient streaks of white hair, a hint of flab around the waist, a couple of witty chat-up lines and that Yankees logo on your hat.

The outcome of all this is a world where everyone finds their perfect match at the lowest price feasible. Markets clear and we all live happily ever after!

In your dreams… Economists will privately confess that perfect competition does not exist in the real world. Like most markets, dating is fraught with “market failures.” Entry is not free, some players have market power and information is far from complete, let alone perfect. But what about the cyber world?

Granted, online dating is a leap forward towards achieving free entry. Anyone can walk in, put up a profile and express themselves at the cost of 20 bucks a month—hardly a barrier to entry. It also goes a long way towards reducing the market power of a city’s boisterous socialites, who dominate the party scene leaving little room for a low-key newcomer from, say, Wichita, KS. I mean, this Wichita guy could be my soulmate but, with no way of meeting him, I keep wasting my energy in trying to crash the Oscars, 3,000 miles west, so that I can finally meet Matt Damon!

The known unknown: But what about improving the information problem? Sure, with just one click I can find out your height, body type, profession and annual gross—let’s say with 70% probability it’s true. Scroll down and I now have a hint of whether you’re a family guy, a pet lover, a sushi aficionado or a chain smoker. But that’s pretty much what I would have found out about you after a ten-minute chat at that party...no? Same info, yet no high heels, no martinis, no frisson; rather, a lackluster Monday night in front of a computer screen. Hmmm.. you pick!

More fundamentally, online dating goes nowhere near addressing the lack of (what economists call) “excludability” in the dating market: That’s your limited ability to stop your Date from succumbing to other prospectors. Sure, that’s what makes Dates far more fun and challenging than… dates! But it’s a problem in so far as it stops potentially beneficial “trades” from happening because of a mutual lack of trust, a lack of signals.

If anything, online dating makes this worse: Why should I bother with a second “wink” when I see you—you who sent me that syrupy email the other day—online, most likely copying and pasting that same syrupy comment to the woman three entries below me? And by the way, is there anyone out there who thinks that winks are NOT utterly lame?

So I remained unconvinced. And after my brief free-trial period, I’m going back to Mother’s good-old courting techniques.. high heels, table manners and all. Besides, Matt Damon is waiting for me... though he doesn’t even know it! Yes, it’s an imperfect world…

Glossary: Perfect competition, free entry, market power, market failure, excludability, Wichita KS, Matt Damon.