Asymmetric information online dating
It's with Stiglitz, though, that information asymmetry has reached mainstream acclaim. Still, this is obviously not an optimal result and one that we should try to avoid. The theory of asymmetric information was developed in the s and s as a plausible explanation for common phenomena that mainstream general equilibrium economics couldn't explain.
Well the dating market is perhaps the most extreme case of asymmetric information. Now Jack knows that he is a rugby-loving, beer-chugging, action film enthusiast. The bad cars will drive the good ones out of the market. This is asymmetric information, a concept that Akerlof believes can cause markets to disappear.
All three shared the Nobel Prize in economics in for their earlier contributions. In simple terms, the theory proposes that an imbalance of information between buyers and sellers can lead to inefficient outcomes in certain markets. In summary, we all know that dating is hard.
If they choose not to follow that first date with a second they will have wasted both time and money.
Even if you manage to negotiate it to the extent that you gain a relationship there is the issue of the sunk costs of dating to consider. He then compares this situation to a lottery. Equally Rose knows she is an aspiring actress who enjoys fine wines and black and white French films. This all sounds a bit gloomy, and of course Jack and Rose could easily, and perhaps sensibly, just end their fledgling relationship after one date and therefore incur relatively small sunk costs. Economist Robert Murphy suggests that government intervention can prevent prices from accurately reflecting known information, which can cause market failure.
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