Imperfect Competition and the Paradox of Choice

Is being a single girl in places like the East Coast as awesome as movies like The Nanny Diaries and Legally Blonde make it seem? Do YSA versions of guys like "Harvard Hottie" and Emmett abound in the wards between between Cambridge and Arlington?
A few weeks ago, I explored the extent to which competitive dating markets exist, arguing that Provo, Utah is a relatively good example of one. In my analysis, I acknowledged that no dating market is likely to be perfectly competitive, but I failed to give a good example of imperfect competition (e.g., monopoly or monopsony). Recently, however, one of my friends suggested that individuals in certain markets outside of the Happy Valley may face less competitive conditions.

According to my friend, in just about every singles ward on the East Coast (including Boston, NYC, and D.C.), there are 2x as many girls as guys. For a guy on the prowl, a place like BYU might seem ideal because of the quantity of girls. However, the valuation of a guy tends to increase on the East Coast since there is a lesser supply of LDS males on an absolute and relative basis. Put differently, an East Coast bachelor may possess more market power relative to a BYU bachelor and can therefore demand higher quality in the women he chooses to date.

That's great for guys, but what does this mean for all the single ladies on the East Coast? For a good chunk of my college years, I fantasized about moving to the East Coast and working on Wall Street. Although I ended up getting my dream job in Phoenix and not Manhattan, there is at least one compelling reason I wouldn't mind living back East--even if it would put me in a seemingly unfavorable bargaining position as as single LDS female.


This book is still on my need-to-read list, but I've heard great reviews about The Paradox of Choice by Barry Schwartz, a prominent American psychologist. Although economists generally assume that more options is better than fewer options, Schwartz suggests that too many options can lead to confusion and frustration for the chooser. In some ways, being in an exclusive relationship is "costly" in Provo since there are many good dating options. Sure, it may be easy for Molly Mormon to enter into a dating relationship with FHE Fred, but while she thinks about dating Fred, she also has to consider whether it would be more beneficial to date Chem 101 Chris, Laundry Room Landon, Friend-of-friend Frank, Smith Fieldhouse Sam, etc. etc. etc. In other words, too many options can be overwhelming.

For this reason, I sometimes wonder if living in smaller (but not totally dry) dating markets in places like D.C. or Boston may actually reduce choice paralysis, making it easier for individuals to settle into longer relationships without worrying about "missing out" on other dating options. Anecdotally, I know that I personally go on many more dates when I'm up at the Y, but it seems that some of my longer relationships have actually occurred while living in non-Utah markets. That said, I've never been a YSA on the East Coast, so I'm sure my hypothesis is a bit simplistic. (Also, I've heard complaints from big city girls that, although the mix of guys in East Coast wards may be disproportionately weighted toward smart, ambitious, "desirable" types of guys, including financiers, lawyers, and academics, those guys are often "too invested" in their careers and may have limited time resources to expend on dating activities. . . . ) Nevertheless, I think that the Paradox of Choice may at least partially explain why living in an imperfectly competitive dating market is not necessarily a bad thing--even if the premises of The Nanny Diaries and Legally Blonde are mostly fiction.

Raising Rivals' Costs through Cattiness

(Image borrowed from http://blogs.nashvillescene.com/pitw/2009/05/convention_center_council_squa.php)

Textbook Definition of Monopoly: Unlike a competitive market, a monopoly is a market in which a single firm supplies all of the output and is therefore capable of setting prices, subject to market demand. Monopolists have "market power," unlike firms in a competitive market. Not surprisingly, firms would like to be monopolies, since higher prices mean higher profits and happier shareholders.

Is it illegal to be a monopolist? It depends. If you gain market power by being "awesome," (e.g., by designing a better computer chip than your rivals by virtue of your being smarter and more talented than your rivals) you have done nothing wrong. On the other hand, securing a monopoly through "bad acts," ("monopolization") is NOT COOL, and is in fact prohibited under the Sherman Act. The question of what constitutes monopolization is somewhat long and boring, but one way that firms may monopolize a market is through raising rivals' costs.

Let's consider a simple (and rather unrealistic) example: suppose the competitive market for cheese consists of several firms in Wisconsin, and one firm in California. Suppose the greedy Californian decides to attempt to monopolize the cheese market by convincing legislators to increase the environmental standards for Wisconsin dairy farmers, but NOT for California farmers. As soon as the legislators accept the Californian's request, regulatory costs for Wisconsin farmers rise, and consequently, the Wisconsin firms incur losses and exit the market. By raising his (or her?) rivals' costs, the Californian has now monopolized the cheese market. Victory for California farmers.

She-conomic Analysis: OKAY. How does this relate to dating? First of all, if my roommate gets more dates than me simply because she is more beautiful, funny, and compassionate, I might get angry, but she has done nothing wrong. Sure, AMD may envy Intel for Intel's market power, but since Intel acquired market power by "sheer awesomeness" and not by "bad acts," Intel, like Pretty Roommate, did nothing wrong. On the other hand, if Pretty Roommate monopolized the dating market by raising her rivals' costs of dating (rivals = me and other girls from school, church, etc.), thereby inducing them to exit the dating market, her rivals certainly have reason to revolt. How might Pretty Roommate raise her rivals' costs, you wonder? Through random acts of cattiness.

I think the classic example of this is how the step-sisters in Cinderella raise Cinderella's costs of going to the ball by destroying her gown right before the party. (If it weren't for the Fairy Godmother, surely Cinderella's costs of making a new dress and securing transportation before Midnight would have been prohibitive, causing her to suffer a "loss" and "exit" the Prince's dating market.) Does this happen in "real" dating life? I tend to stay clear of the cattier crowd, but observational data suggests that,yes, sometimes girls do try to sabotage their peers' dating opportunities by spreading gossip and using unkind words to damage their friends' self-esteem (date-purchasing-power). In extreme cases, I'm sure there are even girls out there who attempt to make their roommates uglier by hiding their makeup, stealing their curling irons, and maybe even feeding them one too many baked goods. . . .

Now, I'm not saying that all or even most girls (or guys) engage in this type of behavior. Nonetheless, the anticompetitive and, frankly, heinous consequences that occur when individuals do successfully raise rivals' dating costs are disheartening to say the least. So, as a market participant, I am all for making monopolization per se illegal--maybe not through a Sherman Anti-"Mean Girl" Act--but by doing my part to NOT be the evil stepsister and by giving the evil eye to any other girls who play that role.

Do Competitive Dating Markets Exist?

Textbook Definition of Competitive Market: A market characterized by a large number of small, identical firms (and buyers), where each firm is a "price taker," and the demand for an individual firm's product is perfectly elastic. In the long-run, profits for each firm are zero in a competitive market, as a result of entry/exit.

She-conomic Definition: Provo, Utah is a rather competitive market for LDS dating. There are many suppliers and demanders of dating relationships, and many good substitutes (how different is "Peter Priesthood" from "Patrick Priesthood"?) As a result, some individuals find it difficult to engage in meaningful ("profitable") relationships, because as soon as a relationship seems to be going well, one of the parties is prone to "exiting" relationship with said partner and "enter"ing into a relationship with a close substitute. The result can be disheartening. But, assuming that barriers to entering new relationships are low, we might expect young men and young women to be able to rebound and move in and out of relationships fairly costlessly.

What "real-life" conditions challenge the explanatory power of the competitive market model in dating? Is every other guy/girl a "perfect substitute" for your ex? What kinds of factors prevent easy entry and exit in relationships?