A series where I attempt to explain basic economic principles through the global dating scene. (Note: imported from previous blog)

Q: In college, I used to wait two days before replying someone I was interested in. But now I have bills to pay, corporate ladders to climb...you know, these games are getting pretty exhausting. Why can't we just be direct with one another?

Actually, that's something I've been pondering as well. Why is it so hard for two human beings to be completely honest and upfront with each other? Sure, there's the so-called "thrill of the chase," but shouldn't we have evolved enough to figure out more efficient ways of courting?

To explain further: Communication essentially involves a sender transmitting a message to a receiver. In the 21st century, when we send a text message to someone, it's assumed that our service provider will successfully and accurately transmit that message to the receiver. But it seems that the evolution of human interaction has not matched the exponential growth of satellite communications. When we humans communicate, elements such as "pride" and "selfishness" create noise in the channel, distorting our true intents into confusing mixed messages.

For those who like diagrams--in a perfectly efficient world, dating would look like this:

So simple. So truthful. But alas, so far removed from the realities of our time!

Instead, modern day dating seems to be more like this:


Or, it might also look like this:

Q: Those are definitely accurate portrayals, but my question still stands--isn't it easier to just tell each other the truth then?

Well, from an economic perspective, sometimes people really have no incentive to tell the truth. I know that's a depressing answer, but let's try to break it down to understand why.

In game theory, cheap talk is a type of communication where sending and receiving messages is:

• costless (in terms of both time & money)
• non-binding
• unverifiable

Sounds a bit familiar, doesn't it? Indeed, society and technology have progressed such that there are now multiple dating channels where one can communicate with no/low cost and with no commitment:

• free online dating apps
• social media
• bars
• etc., etc. 

More specifically, because there is no obligation to see or talk to each other again in most of these settings, each party will choose the action that maximizes their short-term gain. But because they both know this of each other, they are less likely to believe 100% of what the other party says. This leads to situations where both parties can harmlessly flirt with each other but no "action" is taken. For example, why would Justin ask Selena out on an actual date if there's a good chance that she was only flirting for her own short-term satisfaction?

That's cheap talk in a nutshell---when communication is costless/non-binding, most "messages" sent are uninformative and do not affect outcomes. Therefore, people can lie about their true nature/intentions without incurring any negative payoffs.

Q: Uh...too many words--where are my graphs?

Unbelievable...fine, let's try to visualize the decision-making process of a player:
As you can see, if Justin Bieber's true nature is that of a playboy, he can either flirt with Selena (and lie about his true nature) or be an honest man and not hurt her feelings. His two possible expected payoffs would be:

• Honest: 0
• Dishonest: (50%)*(0) + (50%)*(5) = 2.5
• Note: here he assumes there's a 50% chance Selena will respond positively to flirting

Conclusion: Justin has zero incentive to be honest! The rules of game theory and probability have thus concluded that in a noncommittal environment, a player will always play.

And what about our dearest Selena? Given that Justin will always flirt, her optimal strategy here is to not fall for Justin's tricks. She can either ignore him completely or harmlessly flirt back with no expectations, but she definitely should not walk down the "fall for Justin" path.

Q: That's horrifying...is there any scenario where dishonesty and distrust are not optimal strategies?

Oh yes, let me try to end on a more positive note. As I mentioned before, in some cases people do have incentive to tell the truth! Here's an example:
If Justin really does like Selena, his best strategy is to follow his true intentions and flirt with Selena, due to the expected payoffs below:

• Inaction: 0
• Action: (50%)*(5)+(50%)*(-2) = 1.5 -----> still a higher payoff than not trying
• Note: He's still assuming a 50% probability of reciprocation. Also, I gave Justin a -2 rejection payoff as opposed to a -5 (that I gave Selena previously) because Selena never led him on/gave him false hope in this case!

However, a problem arises--Selena will benefit if she falls for a Justin who truly likes her. But based on her past experiences with players, she also knows that it's risky to always fall for whoever flirts with her. How can sincere Justin differentiate himself from all the other players to ensure Selena always responds positively to his flirting?