Economics of Information

Sometimes I love my economics book...

"when most people search for mates, they are looking for someone with whom to settle down. [...] search is costly (and therefore) examining every possible option will never make sense. [...] not even the most determined searcher can manage to date every eligible mate. In this and other cases, people are rational to end their searches, even though they know a more attractive option surely exists out there somewhere.

But herein lies a difficulty. What happens when, by chance, a more attractive option comes along after the search has ceased? Few people would rent a flat if they thought the landlord would kick them out the moment another tenant came along who was willing to pay higher rent. [...] people who are looking for mates would have similar reservations about entering relationships that could be terminated if a better option happened to come along.

This potential difficulty in maintaining stable matches between partners in ongoing relationships would not arise in a world of perfect information. In such a world, everyone would end up in the best possible relationship, so no one would be tempted to renege. But when information is costly and the search must be limited, there will always be the potential for existing relationships to dissolve.

In most contexts, people solve this problem not by conducting an exhaustive search (which is usually impossible, in any event) but by committing themselves to remain in a relationship once a mutual agreement has been reached to terminate the search. [...] And in most countries a marriage contract penalises those who abandon their spouses. Entering into such committments limit the freedom to persue one's own interests. Yet most people freely accept such restrictions, because they know that the alternative is failure to solve the search problem."

Thus it is that the following diagram summarises how to best proceed in the Quest for Love: