Dating sites that limit your options

A new paper by my HBS colleagues Hanna Halaburda and Misiek Piskorski discusses why a dating/matrimony site that limits your options (like eHarmony) might be attractive. Their paper is called Platforms and Limits to Network Effects

The idea is that, even if you would prefer to have lots of options yourself, you might prefer to be one of a small set of options your dating partners are considering.

Abstract:We model conditions under which agents in two-sided matching markets would rationally prefer a platform limiting choice. We show that platforms that offer a limited set of matching candidates are attractive by reducing the competition among agents on the same side of the market. An agent who sees fewer candidates knows that these candidates also see fewer potential matches, and so are more likely to accept the match. As agents on both sides have access to more candidates, initially positive indirect network effects decrease in strength, reach their limit and eventually turn negative. The limit to network effects is different for different types of agents. For agents with low outside option the limit to network effects is reached relatively quickly, and those agents choose the platform with restricted number of candidates. This is because those agents value the higher rate of acceptance more than access to more candidates. Agents with higher outside option choose the market with larger number of candidates. The model helps explain why platforms offering restricted number of candidates coexist alongside those offering larger number of candidates, even though the existing literature on network effects suggests that the latter should always dominate the former.