Economists Learn to Play Matchmakers

Job hunting and love share a commonality: Finding a match can be a harrowing experience that all too often ends in unhappiness. Hence economists have come out with a novel idea to carry out the matching process more efficiently, i. e. 'signaling', which was first tried out in online dating.

One of the problems in online dating is that men are ignored and women are inundated. It is difficult and time consuming for a woman to seperate spammers from good prospects. Hence, Muriel Niederle, Stanford economist came out with an idea of signaling, i. e. each male memeber was allotted two electronic roses a month, which they could send along with messages to women whom they wanted to impress. The scarcity of roses motivates the suitors to be selective and serious.

The similar idea was applied at this past weekend's annual meeting of the American Economic Association in Chicago, which hosts a vast job market for newly minted economics Ph. D.s. Signalling here involves sending electronic pings to two potential employers, who face a similar problem as women members in dating sites. With a limited number of signals to send, it is expected that, candidates will send them only to those schools where they really want to work.

Even though its too early to say whether the experiment has succeeded or not, it's definitely an innovative idea to increase efficiency in a transaction/ contract, thereby reducing deadweight loss.