How Do Dating Apps Make Romance More Efficient?

Romantic partnerships and the search for “the perfect partner” have played a central role throughout the course of human history. The biological need for relationships is what drives humans to search for a mate, and countless people have experienced the emotional and psychological benefits of such a union. However, from an economic standpoint, the traditional method of matchmaking through mutual relations is inefficient, thus leading to a market failure in which not everyone looking for a partner will find one. However, thanks to advancements in technology and/or changes in culture, the method of finding the ideal romantic partner has changed and adapted to the era. In the modern age, many turn to dating or matchmaking applications (apps) and services to aid them in their search for the ideal mate. The widespread use to technology has revolutionized the matchmaking process by making it faster and more accessible.

In a traditional economic market, goods and services are matched through supply (production) and demand (consumption). These forces of supply and demand are controlled by price determination, which follows the general rule that a higher price results in more supply and less demand, while a lower price results in more demand and less supply. This is relevant to the concept of equilibrium, as it is achieved at the point where producers and consumers agree on the price of a good.

However, markets can fail to achieve equilibrium for a number of reasons, such as a lack of property rights or negative externalities. This article focuses on inefficiency as a form as a form as market failure, as it is most relevant to the topic of matchmaking markets.

An inefficient market means that “scarce resources are not being put to their best use,” which in this context implies a lack of equilibrium between the supply and demand. There may be adequate sources of supply and demand, if they are unable to be exchanged for any reason, then the market has failed to achieve equilibrium.

The kidney market within the United States is a prime example to further illustrate the concept of an inefficient market. There is an adequate supply of healthy kidneys in the United States, yet every day thirteen people die while waiting for a kidney. Therefore, there is both a high supply and a high demand, yet a market mediating the transfer of these goods is illegal, therefore rendering the kidney transfer market an inefficient market, as an equilibrium between the supply and demand of goods is not achieved.

Unlike many markets which mostly depend on a good or service’s price, the matching market depends on the willingness of both the seller and the buyer. Professor Alvin E. Roth, a co-recipient of the 2012 the Nobel Memorial Prize in Economic Sciences, defines a matching market as an economic market where mutually beneficial trades over time take place. Supply and demand in a matching market are not balanced by price, but rather by available information. Examples of matching markets include kidney exchanges, college admissions, job applications, and arguably the most famous, the dating market.

In a matching market, both parties must agree on conditions for a transaction to be successful. For example, when consumers shop for a house they choose what suits them the most aesthetically, financially, and regionally. However, the search for a romantic partner is different from a traditional market. Dating can be analogous to a job search, where both parties must agree for the operation to be successful.

As in a traditional market, the dating market has a system of supply and demand; however, in this case, the goods traded are romantic relationships. On the supply side exist various traits and attributes that define the goods, which include appearances, personalities and beliefs. Meanwhile, on the demand side, there are people seeking partners with specific characteristics compatible to theirs. Since markets usually move towards equilibrium, we could predict the point at which the dating market would reach its equilibrium point. As shown in the figure below, this point is where both the supply and demand curves intersect, or when every person finds a matching partner with the desired preferences.

Traditionally, people found romance through mutual relations, such as friends or family; this is especially true as the chances of finding an ideal partner by one’s own means is improbable. In an ideal world, one would have the ability to choose between all potential partners and pick the ideal match; however, in reality such a search can be very time consuming and inefficient. A dating market may rely largely on the concept of a search cost. According to traditional dating practices, it costs both parties considerable expenditures to ascertain their incompatibility. There is this example of a girl who has paid great sums of money in order to prepare for her date. The costs varied from new clothes, transportation fees, as well as paying for the bill at the restaurant or a café, while bearing the risk that the other partner may not even be compatible. In a time when few women went to college, men searched for their ‘sweethearts’ in high school. However, when women’s participation in colleges and in the labor force has increased, it still seemed to be unlikely for men to find their life partners, as many men are not willing to date the person sitting at the next desk.

The dating market’s major source of inefficiency is the result of having potential partners who are unable to connect through their own means, suggesting the need for a mediator in some form. The lack of balance between the two effective forces results in the market’s disequilibrium. This inefficiency leads to a wide-scale market failure. In traditional dating, people may build up high expectations for the other person’s attractiveness or personality; thus, setting themselves up for disappointment. Thus, the “colossal vitality of one’s illusion” can be a major cause of inefficiency in the traditional dating market.

The figure above illustrates this loss of efficiency in a free market allocation, while the intervention and increase in information availability increases the efficiency significantly. In traditional dating, there may be an information failure, where a person cannot tell what type of relationship a potential partner is looking for, creating conflict between casual and committal dating. Furthermore, in a typical dating market, there seems to arise a monopolistic behavior, where the optimal mate with has the most widely desired qualities has the widest choice among other partners. Therefore, this monopoly could also contribute to a market failure, as there is no equal price among the potential mates. Typically, it is very difficult to gauge the compatibility between two potential partners, which leads to failure in the relationship. Thus, any advancement to make this process easier creates immense efficiency in this market.

Dating apps help achieve efficiency in the matchmaking market by serving as a form of intervention. In the modern age, more people move away from “matchmaking” friends and family for work, study, or any number of reasons. With longer life expectancies, people are looking for relationships later on in life, past prime opportunities in match finding. For example, post-secondary education and/or parents often play a pivotal role in the love life of a younger individual by providing a particular pool of potential mates to choose from. However, past a certain age self-reliance is necessary in order to meet ideal partners, especially when it becomes difficult to ascertain the availability of a person. The spread of fast broadband connectivity aided the emergence of online platforms for aiding this matchmaking process . The greatest appeal of these services is their widespread availability and universality, bringing together people from all over the world with have access to the internet. The efficiency they bring is defined as an attempt to increase the general welfare total with the available resources. In this context, the available resources are unmatched individuals that would like matched, and maximum efficiency in this market would be for all such individuals to have a partner. While in reality, outside influences render this impossible, striving towards maximum efficiency is ideal for all parties involved.

The specialization of dating apps is the result of increasing the efficiency of partner searching. To cater to the needs of consumers looking for romantic relationships, specific markets have been targeted by dividing people into specific groups based on their preferences in a partner. Traditional companies such as eHarmony, Match, and OkCupid offer paid subscription services to those looking for a stable, long-term relationship. Users are required to fill out personal descriptions on their profiles and answer questionnaires, which are then computed through specific algorithms to present a few potential partners who seem to be ideal matches based on their specific traits and preferences. The algorithms used for the calculations are flexible; they adjust and change pairing methods based on user feedback, and their high sophistication is a major advantage and appeal to the companies that use them.

Matchmaking apps and websites create large groups of potential mates that would be difficult to replicate in the real world, and are especially useful for targeting specific markets segments. A prime example of creating a specialized pool of people would be Grindr, which claims to be the “world’s largest gay social network app”. Rather than basing competitive advantage on matching two users from a large and diverse group of potential partners, they focus on efficiency, basing their success on targeting a specific demographic rather than individual service. Grindr presents all members a few desired traits, such as age and location, to all other members of those qualities, and targets a specific demographic: the homosexual male community. By doing so, they provide an environment designed for better finding others with the matching sexuality, which is a pool of potential mates difficult to reproduce in the real world. While the traditional aforementioned companies of OKCupid, eHarmony, and Match do offer the option to find others with the same sexual preference, many prefer the inclusive environment of LGBTQIA+ specialty apps; hence, granting these apps a competitive advantage.

Another example of market segmentation would be Tinder. It is engineered with an engaging user interface like that of a mobile game, and designed so that one can swipe on member profiles to show interest in a potential match . One’s indication of preference is only released if the attraction is mutual, which caters to those who prefer privacy and would not like to have their interests transparently broadcasted. This promotes efficiency, providing more matches that may or may not be ideal, contrasting the ideal match service of services targeted towards older demographics such as OkCupid. Just like Grindr, Tinder’s efficiency comes at the sacrifice of their accuracy, yet still promote romantic relationships to those who would have suffered at the hands of market failure. Through the entry of mobile apps tailored to the multi-faceted dating market, it has become easier than ever for consumers to find their ideal matches, even if those may be less than perfect. Therefore, the failure of the traditional dating market is being corrected by the intervention of matchmaking apps to address the difficulties of this matching market in the modern age.

Despite the swathe of opportunities opened up by the intervention of dating apps, there are still inevitable failures with the matchmaking market that exist as provided by outside influences. One reason is the consumers themselves utilizing cooperative game theory. Many users embellish their profiles in an attempt to make them appear more attractive to potential partners, thus creating a so-called “lemon market”. As a result, the market is saturated with people who all claim to have good qualities, making it virtually impossible to determine the liars.

This is paired with the subject of search cost. While dating apps aid in lowering the time and effort in finding a match, it itself cannot be entirely eliminated. One still must take part in a first encounter, such as a date, to determine partner compatibility. As many dishonest profiles exist, this leads to confused users eventually leaving the market, thus rendering it inefficient and causing failure.

Another problem stems from the abundance of people looking for a match in the dating market. Because of the sheer number of choices, there also exists a lot of “cheap talk” where users would try to contact every match the apps provide. When this happens, it becomes difficult to determine the sincerity of the requests received, leading to inefficiency as users try to sort out the genuine responses from many others.

However, some matchmaking apps have attempted to solve this through the introduction of artificial scarcity. In economics, this is defined as limiting the quantity of a product or service that would otherwise be in abundance or inexpensive. In the case of online dating, one Korean website has come up with an innovative method of virtual rose giving- users can message up to ten people to whom they’re interested in, but can only give a rose to two. Likewise, Tinder has introduced the “Super Like” function, which free users can employ only once a day to show explicit interest on a profile. Through these features, genuine interest is indicated via artificial scarcity. While artificial scarcity truly does make a difference statistically, the reality is that not many dating apps have adopted this policy, meaning that market failure still exists. While matchmaking apps attempt to make the search for a compatible partner easier, the process itself is not perfect. As it is with dating, there is always room for improvement.

The creation of matchmaking apps has now made dating easier more than ever. While imperfect, they have provided a previously unavailable intervention that bring efficiency to the dating market. Compared to the past, when a potential mate did not have much of a choice in selecting for preferred traits, now all one must do is access an app and be presented with scores of ideal available candidates. Gone are the days of multiple inefficient dates in which two interested people try to get to know each other, as these applications save time by bringing together those who share commonalities, who then decide if they would like to pursue a relationship. Indeed, the price of such a market are simply preferences of the users, of which are easy to match thanks to technological development. Through this, successful and long-term relationships are created, leading to a better society with happy and satisfied couples. If these matchmaking applications have taught relationship seekers anything, it is that there are always plenty of fish in the sea.

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