Decoding the Dating Market: Can We Really Put a Price on Love?

'Transferable utility matching games' are an economic model used to understand how individuals with different values find compatible partners. In the context of dating, each person brings a certain value to the table, and the success of a match depends on how well these values align. This model helps economists understand assortativeness—the tendency for individuals with similar characteristics to pair up—and the role of matching costs. It essentially models the dating market as a series of transactions where individuals seek to maximize their utility by finding the best possible match, given the costs involved. However, this model simplifies the complexities of human emotion and attraction, which are not always easily quantifiable.

In economics, 'individual rationality' means people make choices that benefit them. When it comes to relationships, this translates to individuals deciding whether they are better off in a match or remaining single. This decision hinges on whether the perceived benefits of the relationship outweigh the costs. 'Individual rationality' is crucial for identifying matching costs because it provides a baseline understanding of why people enter or avoid relationships. By observing the choices of 'unmatched agents,' economists can infer the threshold at which the costs of matching outweigh the benefits, providing valuable data for calculating the 'matching cost' coefficient. However, 'individual rationality' doesn't account for altruism or irrational behavior, which can significantly influence relationship decisions.

Suguru Otani's study, "Individual Rationality Conditions of Identifying Matching Costs in Transferable Utility Matching Games," provides new insights into measuring assortativeness by combining observations of unmatched individuals, data on transfers (like gifts or shared expenses), and individual rationality conditions. Otani reveals that by combining observations of unmatched individuals, data on transfers (like gifts or shared expenses), and individual rationality conditions, it becomes possible to identify the elusive 'coefficient parameter' representing matching costs within the market. This research builds upon existing methods, such as the 'matching maximum score estimation' developed by Jeremy Fox, by pinpointing the specific data and conditions needed for identification, with a focus on the often-overlooked role of matching costs. However, Otani's model assumes that relationships are purely economic transactions and does not fully account for the emotional and psychological factors that influence dating decisions.

'Matching costs' represent the 'price of admission' to the relationship market, including the time, effort, emotional vulnerability, and expenses involved in finding and maintaining a relationship. These costs can significantly affect the dating market by influencing individuals' decisions to enter or remain in relationships. Higher matching costs may deter some individuals from actively seeking partners, while lower costs may encourage more participation. Otani's research aims to identify and quantify these costs by analyzing data on unmatched agents, transfers within relationships, and individual rationality conditions. However, accurately measuring 'matching costs' is challenging because many factors are subjective and difficult to quantify.

Data on 'unmatched agents'—those who choose to stay single—reveals the threshold at which individuals find the costs of matching (e.g., time, effort, emotional vulnerability) too high. By analyzing the characteristics and choices of 'unmatched agents,' economists can gain valuable information about the factors influencing relationship decisions. For example, if a large number of highly educated women remain single, it may suggest that the 'matching costs' for this group are particularly high, possibly due to limited partner options or career priorities. This data, combined with information on transfers and individual rationality, allows for a more precise calculation of the 'matching cost' coefficient, which is essential for understanding the underlying dynamics of the dating market. However, it's important to note that the reasons for remaining single are complex and may not always be driven by purely economic considerations.