Selling our Friends on the Market for Love

A few years ago I bought an old book called “How to Find the Love of Your Life” that argued that the secret to finding love is to ask all your acquaintances, no matter how remote, to hand over the contact information of every single they know. To me, this does not seem like a winning strategy. Even after you ignore the frightening privacy issues it creates, it is my perception that people are generally unwilling to relinquish their single friends to others and that, between the two genders, women (even married women) are far less willing than are men.

Recent research published in the Journal of Economic Psychology provides some evidence that even when men and women do not know the singles whose contact information they are being asked to share, they are not willing to give it away cheeply.

Colette Nataf and Thomas Wallsten (University of Maryland) conducted a study in which participants were given the profiles of ten, fictional, singles and asked to either act as buyers or sellers of the list. Sellers of the list were asked to state their willingness to accept (WTA) – the price at which they would be willing to sell each of the contacts – and buyers were asked to state their willingness to pay (WTP) – the price they would be willing to pay for each of the contacts.

The difference between male and female participants, and the prices suggested between buyers and sellers of contact information, is striking.

The range of prices suggested by female sellers ranged from $7.10 to $23.50 (depending on the characteristics of the contact – more attractive contacts lead to higher expected prices), while the range of prices suggested by female buyers ranged from only $0.34 to $3.97.

On average, female sellers expected a price ten times the price buyers would be willing to pay, so even if a coordinated market existed it is unlikely any trade in contacts would take place.

The range of prices suggested by male sellers was not lower (from $4.76 to $ 18.03) but also much closer to the range of prices suggested by male buyers (from $1.72 to $10.12) – on average, male sellers expected a price that was only three times higher than buyers might be willing to pay.

Why do we see this discrepancy in prices between males and females, and buyers and sellers? One possible explanation has to do with difference in values of the contacts to men and women, and to buyers and sellers.

If we think about the purchase of a contact as being similar to the purchase of an asset that pays an, albeit, uncertain, dividend over a period of time, then if women are seeking long term relationships, the contact will pay a higher expected return since it pays out for a longer period of time. This might explain why it is that female sellers are demanding such a high price for contacts.

And if, on the other hand, men are seeking shorter term relationships, then the contact will have a lower expected return since it will pay out for a shorter period of time, which might explain why it is that male sellers are demanding a lower price for the contacts.

This doesn’t explain the gap between WTA and WTP for women, but what might is if buyers of contacts take the fact that they are being sold as a signal of low quality of the contact – women (and probably men as well) might well wonder why the contact is being sold in the first place instead of being used by the seller themselves and so are willing to pay a lower price.

The authors of the paper have a different explanation for why the male WTA and WTP gap is smaller; they argue that men are more often “consumers in the dating market” and, as a result, have a better sense of the market value of the contacts.

Translation: buying and selling of women is nothing new to men and so they have more realistic expectations of market value of women just as experienced buyers and sellers of other consumer products would have better knowledge of the specific market for their goods.

As a business model, creating an online market in which people can buy and sell the contact information for the singles they know is unlikely to be profitable - let’s hope we never have to find out.

References:

Nataf, Colette and Thomas Wallsten (2013) “Love the one you’re with: The endowment effect in the dating market.” Journal of Economic Psychology 35 (2013) 58–66.