Sending costly signals.

http://joss7.deviantart.com/art/Virtual-Rose-170342184

In my last post I outlined why in online dating, a guy might send generic easy-to-write messages to scope out a girl’s interest before investing more effort in the conversation.

The problem with these messages is that the message is likely to get lost in the noise of all the other low cost messages.

The opposite approach is the utilise the sending of costly signals. 

Paul Oyer outlines this dynamic in his book Everything I ever needed to know about economics, I learned from online dating.(My review here).

Costly signals allow a potential match to differentiate themselves from the rest of the competition.

Costly signals can be used in other matching markets. An example Oyer uses, is Google who recieves more than two million job applications a year needs some way to filter through the candidates to decide who to begin interviewing. Google is obviously a desirable place to work, and the cost for a college graduate, regardless of their technical skill level, to send Google their CV is minimal. One way Google could filter applications, is to require applicants attach a $10 application fee. For the lower skilled applicants this would make applying for the job too costly, while for candidates who stand a reasonable chance of being employed, the potential benefits of working for Google make the fee worthwhile. Paying the $10 fee effectively signals ‘My cost-benefit analysis determines that I’m of sufficient skill level that I have a reasonable chance of you employing me’.

A different costly signal Google could require would be completing a challenging coding exercise.

The idea of a $10 application fee leaves a bad taste in our mouth, and there are all sorts of reasons that Google might choose not to use this method of filtering (A coding exercise probably being a lot more effective), but this example gives a good starting point for thinking about costly signals.

Oyer mentions an experiment done in South Korea, where participants took part online dating market and were randomly assigned between two and eight virtual roses, which they could elect to attach to messages to show special interest. The study found that the virtual roses had little effect in eliciting responses from the most attractive in the dating pool, but were much more likely to elicit if sent to those in the mid-range of attractiveness.

Tinder has recently added a such a costly signal function. Users are a single ‘super like’ each day . The super like always shows a notification to receiver and gives them an option to then like back.

This completely changes the game for Tinder. For attractive girls on Tinder, it’s common that every right swipe they make will result in a match. Because super likes are so limited they are likely to be a much rarer form of validation. Tinder’s research shows that people are three times more likely to respond to the a super like. While users are allotted only one super like per day, they have the option of paying for additional super like. This is clever monetisation by Tinder – it’s not intrusive as well as providing a service that has real value.

Paul Oyer suggest another form of costly signalling – attaching donations to charity to messages. A user could send a message and also have the option of making a donation to charity when he sends the message. When the recipient receives this message they fact of their donation is highlighted. What this shows is that the guy is so willing to talk to the person that they’re willing to spend money to get their attention. I think this would be very effective on a dating site like OkCupid, which in my impression has a high percentage of left leaning politically engaged women, who are likely to appreciate the idea of giving to charity.

I personally would use such a service, and I’d be willing to pay a 10% fee to the dating site for the service. I’d be willing to pay up to $5 a message. I donate to charity anyway, and so any amount that I’m paying via a dating service serves as a double use of money, I’m buying both the feeling of goodwill for donating to charity, as well as buying a (hopefully) effective costly signal.

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