Society

An Economist's Wholehearted Defense Of Online Dating Sites

Platforms like Tinder have a reputation for facilitating quick hook-ups. But their impact on society is far more profound than that, argues a French economics professor.

Dating site algorithms might lead to more fruitful relationships
Dating site algorithms might lead to more fruitful relationships
François Lévêque

-OpEd-

Users of Meetic, Tinder and other dating apps now number in the hundreds of millions. Many are frightened by it, worried about rampant abuse and scams, while others see it as another example of the evils and excesses of modern society. And yet, these dating sites have a great social utility.

Online dating provides a new way to build a short-lived or lasting relationship. It has been added to the traditional opportunities to find a partner in one's network, namely our professional environments, family circles, group of friends, bars, concerts, etc. In fact, these in-person meetings are even losing their importance. In the United States, one in three recent marriages began with an online encounter, and this proportion increases every year.

Should we think of this shift as a substitution without great consequences for society, something akin to buying books on the internet rather than in bookstores? No, but not for the reasons you may imagine. Compared to marriages that originated with a traditional first-encounter, those that began with an online connection last longer, end in fewer divorces and more often bring together couples of different religions or ethnicities.

The knowledge of preferences — one's own and those of others — is indispensable for a successful match.

Online platforms make it possible to break out of an often homogenous environment and considerably expand the number of potential partners. As a result, the chances of meeting a partner closer to your preferences are multiplied. This is obvious for people whose inclinations are less shared — and therefore less common in their close circle. In the United States, 70% of homosexuals meet their partners online. There are also specialized sites that connect people who are allergic to gluten or who love dogs.

Finding a soulmate is not only made easier by the very large number of potential contacts. The knowledge of preferences — one's own and those of others — is indispensable for a successful match. When they are perfectly known, economic theory shows that the formation of couples is optimal.

Yes, economists have also taken an interest in marriage, even the greatest of them, such as Nobel laureates Gary Becker and Lloyd Shapley. With X number of men and X number of women, what is the best formulation? Ask these economists. For Becker, it's a matter of complementarity: The perfect match is one that maximizes the gain from living together with children, a house and a car. For Shapley, it's a matter of rivalry, but everyone ends up finding the right fit, since no couple is worse off than their individual members. Put another way, both of them would probably have preferred an even more desirable partner, but that partner would not have accepted them.

It's a match! — Photo: Yogas Design

The development of online dating sites has brought such balances closer. By filling out long registration questionnaires, users better understand their preferences. Based on their responses, they swipe potential matches and through the trial-and-error of first dates, they better measure their desirability. In short, the matches are better, hence the longer duration of relationships compared to marriages initiated at the office, at university, at family gatherings or during Saturday night outings.

In reality, though, the competition isn't all that fierce.

Of course, we are still a long way from perfect couple formation. Apart from the fact that preferences and desirability change over time, two main reasons can be suggested: imperfect information and imperfect competition between online services.

Imperfect information paves the way for opportunistic behavior. Each person aims higher than their own profile would allow because they can bet on the fact that the other will not notice. But it does not encourage the performance of matching algorithms to be pushed too far, because once the ideal partner has been found and matched, engaged and married, the dating site will lose its subscriber, at least for a while.

Competition between platforms, which focuses on the quality of the matching algorithms, prevents this. In reality, though, the competition isn't all that fierce, because a great number of the dating sites, including Tinder, the top platform in terms of user numbers, are operated by a single entity.

The market leader isn't a visible giant like Google or Amazon, but a little-known player called Interactive Corp, which runs Tinder and dozens of other sites — including Plenty Of Fish, Match.com, OKCupid, Hinge and Meetic — through a Nasdaq-listed subsidiary called Match Group. And that's something to keep an eye on, because a monopoly should not be allowed to undermine the social benefits online dating sites provide.



*François Lévêque is a professor of economics at Mines-ParisTech University PSL and author of Les Habits neufs de la concurrence.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
THE LATEST
FOCUS
TRENDING TOPICS
MOST READ