Wednesday, August 02, 2006

The Dater's Curse

Imagine you're at an auction at the auctioneer unveils a locked chest two hundred years old. He says it has never been opened and nobody knows what's inside. How much are you willing to put down for it? The answer depends on what you think is inside. Some might think it's filled with old socks and only pay based on if they think the chest would look good in the guest room. Some might think it's filled with some interesting artifacts from the era--mostly junk but a few treasures--and be willing to pay a bit more. Some might think it's filled with gold. These people tend to win these kind of auctions.

Generally speaking, people are, on average, right about unknown in straightforward scenarios like these. Some people overestimate, some underestimate and the errors tend to cancel each other out. But the person with the highest estimate will bid the most, open the chest and cry over the pile of blankets and love letters. Economists call this the winner's curse: the person who estimate the value of an unknown object the most will tend to pay the most for it and end up regreting it.

The same could be said of dating markets. The guy that's spent a lot of time and attention on a girl at a party "wins" her and she usually isn't worth it. We've all been there; I certainly have. Experienced daters, like frequent participants at auctions, know better: tone down your guesses when you bet on the unknown. You're be a lot happier and win--really win--a lot more.


Jenna said...

My sympathies over whatever situation induced this post. That said, the girls' side of the dating market isn't any better. Sure, we're generally not the ones to go out and take the risk of doing the asking, but a lot of girls get all hyped up about men they really don't *know* and are let down rather harshly when the truth sets in...

jeremy h. said...

Here is my advice to you: if you are traveling with Koch employees, and you encounter an anarchist girl on the Metro (perhaps, at the Tenleytown-AU stop) still carrying a keg cup from the party where you did not even meet her since it was more like a fraternity party than one "for liberty," DO NOT ask for her phone number. She may invite you to play boggle, she may not. But that is all.

On the other hand, if she appears to be a fan of John Stossel, all bets are off.