Tuesday, February 21, 2006

Relationships III -- Overview of Dating Economics

For the same DnD article discussed in the previous post, the reporter asked me to "briefly explain the economics of dating."

Here is my prepared response:

The economics of dating focuses on a few key questions:

Basically, we want to know who meets whom; after meeting, who dates whom; once dating, who continues to date/get married, etc., and why. We are also interested in understanding when this market may fail – i.e., what prevents potentially good matches from being formed?

To figure this out, one needs to understand some basic features of the social network, understand the sources of relationship productivity, and understand the bargaining process within relationships.

Understanding the social network helps us understand who is likely to meet whom and what information are they likely to have (or to lack) about potential partners.

Relationship productivity is usually referred to as “chemistry”, but it is really productivity. In dating economics one focuses on what makes one pairing of people more productive then another. This is very important because ultimately we will only consider being in relationships with people with whom we can achieve a certain level of satisfaction (or utility).

Finally, dating economics focuses on how the relationship product is allocated through bargaining. (E.g., I will go shopping with you and endure you trying on 27 pairs of jeans in exchange for you not nagging me during the game -- this is massively over simplified, but you get the idea. In reality, most relationship bargaining is not this explicit, but it still goes on.)

Ultimately, two things lead to the end of the relationship: breakdowns in relationship productivity and breakdowns in intra-relationship bargaining. Once an individual no longer believes that they will be better off staying in the relationship versus reentering the market, they leave, and the relationship ends.

The economics of dating is about exploring and understanding the myriad of issues which affect this process.

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