David Friedman - Dating Markets, Legal Systems, Bitcoin, and Automation

**Dwarkesh Patel** (0:00)
Hi, today I have the pleasure of interviewing Dr. David Friedman, who is a famous and agro-capitalist economist, and most recently the author of Legal Systems Very Different From Ours. So my first question is this, is the dating market efficient, in the sense that it doesn't maximize net value? It's not a competitive market because I'm not substitutable for another bearded 20-year-old Indian man.
So I'm curious how efficient you think the dating market is.

**David Friedman** (0:27)
Oh boy, I've been puzzled for quite a while on why online dating doesn't work better than it does. That in principle, a lot of dating is a sorting problem. That not only are you not identical to another bearded Indian man of the same, Indian ethnic man of the same age, your potential dates have different tastes. So that it's really, I actually discussed some of this. I've got a chapter in my price theory text, which is really on what I think of as the marriage market, although it applies to dating more generally. And I have one model, which is the really simple economic model, in which in effect everybody is identical.
And you have a market in which there's an implicit price in terms of the terms of marriage, how much the husband agrees to do, to what extent the wife gets to make decisions, things like that. And you then allocate people, you then have an equilibrium price. And the real point of that section is that I'm arguing that the effect of polygyny or polyandry is the opposite of what people expect. That if you legalize polygyny, you allow it, make it legal for a man to have multiple wives, the result is to benefit women and maybe to harm men. Because if men can have multiple wives, that's going to bid up the price of a wife. It means that some men can in effect go on the market and try to bid for two wives instead of one.
And that then means that the ordinary monogamous man still ends up getting a wife but on worse terms. He's got to do more of the dishes.
And women either get all of a husband on better terms or half of a husband on terms good enough so that they prefer half of that husband to all of another. And that's sort of a fun argument. And of course, if you legalize polyandry, you allowed a woman to marry multiple husbands, you have the same effect in reverse. So that's the easy model. And then the harder model is the sorting model. And even then, I only have a simple sorting model. My sorting model is one in which everybody's value as a spouse varies, but it's the same to all potential partners. And the real one is one in which not only is your value as a spouse different from somebody else's, your value as a spouse is different to some people than to someone else's. The way I like to put it is that the woman who I eventually concluded was about a one in 10,000 catch was not in fact being pursued by anybody else at the time, because other people had weird tastes and did not recognize what a desirable partner this was from my standpoint. I should say we're still married. That was 38 years ago or so that we got married. So that's a really hard problem. And I'm not quite sure the problem is that a lot of economics ignore search costs, because we don't have a very good way of handling them. And yet search costs are really central to the dating problem. And I would have thought that things would get a whole lot better with computer dating, because you can take all of the characteristics that are sort of objective and measurable, tell them to the computer, have each person search a million profiles, find the subset of that who meet the easy characteristics, and then interact with each other to find how well they do. But as far as I can tell, it hasn't happened. I don't think that marriage has worked better since computers came in. The people I know who have been trying to use computer dating haven't found it very successful and so forth.
And in fact, the story I'm told is that OKCupid, which is one of the most successful of these things, has gotten worse over time. It was originally designed by enthusiasts who did clever things and then taken over by businessmen who did less clever things. Now, it may be the people I've talked to are just sufficiently different from the mass of the market, so that what looks, what works for other people doesn't work for them. But that's my impression. So, is it efficient compared... There's efficiency, you've got to compare it to some alternative.