Cheap Talk

In markets where money is not the only determinant of who gets what, there are just two kinds of market signals that matter: Cheap Talk and Costly Signals.

Stanford economist and Nobel winner Alvin Roth has written a new book: Who Gets What – and Why. For markets that involve matching, designs or rules are necessary to solve problems that marketplaces can’t solve naturally. Examples include kidney transplants and college admissions.

Economists like to point out that many markets operate like courtship and Roth is no exception:

“[These] markets are more than a little like courtship and marriage: each is a two-sided matching market that involves searching and wooing on both sides. A market involves matching whenever price isn’t the only determinant of who gets what.”

In any market where matches are made, players must communicate essential information. Unfortunately, we live in a time of information overload, and filtering the important communications is very difficult. According to Roth, signaling becomes an integral part of matching.

“First, is the candidate qualified enough for the…romantic partner to be worth further investigation?

Second, is the candidate interested enough to justify effort on the part of the romantic partner?

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Both kinds of information are especially valuable in congested markets, as there isn’t enough time to explore every possibility. So signals, and how to send them, can be an integral part of a market’s design.”

Cheap Talk

Online dating is a very congested market. Roth describes the typical process:

Attractive women get more emails than they can possibly answer.
Men get a low response rate on their emails, and respond by sending new waves of emails.
The men’s priority is now about volume, so little effort is made to customize the message to a particular woman’s profile.
Most emails women get are entirely superficial and clearly sent en masse.
All parties are frustrated, matches are made inefficiently or not at all.
Economists call these superficial messages Cheap Talk. They don’t reliably signal anything, much less real interest. They represent noise in the market, and they are a distraction that impedes the market’s real purpose of making matches.

As you can imagine, women get overwhelmed and even disgusted when they go online to check their messages and they find 200 Cheap Talk emails. In fact, it’s very unlikely a woman will sort through 200 emails just to find the handful that are genuine and worthwhile Costly Signals. Cheap Talk drowns out quality.

Roth points out that an email subject line of “I love you” is meaningless when it is sent to many recipients. The hapless sender of such an email campaign has failed to realize three major things that turn women off:

I. A lack of selectivity

Whether it’s a guy asking out every woman he meets, or a player having sex with every woman he meets, women don’t want men who are not selective. When a man is not selective, then how significant can it be that he chose us? We can be sure that in his eyes we’re a commodity rather than a unique person.

II. A lack of creativity

Women don’t like men who put in zero effort. We hate it when guys text “hey” for no apparent reason. When my daughter was growing up I’d observe that such-and-such a guy was cute and seemed to like her. Often her response was “He doesn’t have anything to say for himself.” What she meant was that all his communication was Cheap Talk, so she wrote him off.

In contrast, the guy who sends a thoughtful email commenting on your interests and sharing his thoughts on how you might be compatible is sending an actionable signal. His chances of success are much greater because he’s producing a real market signal instead of noise. (Or they would be greater if his signals weren’t being lost.)

III. A lack of seriousness of purpose

Women like men who:

Know what they want
Want the same things they do
Go for it
Women want to be contacted for meaningful conversation that will lead to a plan. We like a man with a plan.

Women often feel frustrated when they go out and men approach them with Cheap Talk, because they’re either off the market or not interested in meeting new men on that occasion. Yet we have no efficient way of signaling this that doesn’t feel rude. So we often respond with flimsy excuses that constitute more Cheap Talk.

One popular theme among college kids is the stoplight party. A red shirt means you’re taken, green means you’re available, and yellow means “it’s complicated.” Just think how much Cheap Talk this eliminates! (Not to mention how it thwarts would-be cheaters.)

Roth offers an explanation for diamond engagement rings that I’ve never heard before:

“This helps explain why expensive diamond rings often accompany proposals of marriage (and why wearing them signals to other potential suitors that the wearer is uninterested in further proposal, and is thus unlikely to be worth pursuing).”

The man gives a valuable token as a way to tell other men to back off – it’s a mate guarding strategy!

Costly Signals
Roth suggests that for matches to occur we need to transmit Costly Signals rather than Cheap Talk.

Women have historically sought tangible investment from males before entering sexual relationships. Requiring males to meaningfully signal romantic intent is the only method women have of knowing they won’t be left holding the baby (or anything else).

The best way of ensuring this is by only responding positively to Costly Signals. In this context costly does not refer to money, though it may. Investments of emotions and time are also costly. Roth calls your attention “a valuable, costly good in itself.” Something as simple as remembering a birthday is a Costly Signal. So is a genuine question about how your day is going.

Fortunately, Costly Signals are easily recognized in a relationship, even in the very early days. Is he making a real effort? Is his communication meaningful and unique to you? What you’re looking for here is a totally customized signal that reflects effort. Anything less is Cheap Talk.