How to get a girlfriend/boyfriend using Economics

Economics can play a part in every aspect of all of our lives, even in relationships. This week’s blog will focus on the application of one part of economics, Game Theory.

Game theory

Game theory is a branch of economics, which is concerned with how people make decisions based on what other people are doing, and in turn, how other people will make decisions based on what you’re doing.

Game theory can be applied in any circumstance where there is human interaction, from socialising with your friends to debates in parliament.

An example of one, which you may have herd of, is called the Prisoners’ Dilemma.

Two prisoners sitting in individual cells have been accused of collaborating in a crime. They have no way of communicating with one another and are asked to confess to the crime. If both prisoners confess they will each receive a sentence of 5 years, if neither of them confess then they will only receive a sentence of 2 years. However if one confesses and the other does not then the confessor will go to prison for 1 year and the one who does not will go to prison for 10 years. Both prisoners are made aware of the prison terms.

If we put our selves in the position of prisoner A for a moment, we can soon realise the outcome of this game. Since we know that people hold their own interest first before others, we know that prisoner B will try to go for 1 year sentence (confess). We also know that Prisoner B will be thinking that the same thing about us and so will not risk a 10 year sentence (denying). The result is that both prisoners will confess to the crime even though it was in both their interests to deny the crime.

This is a good example of game theory in action, where both players were considering the actions of each other when making their decision.

The Game

The game of romance is significantly more complicated than that of the above example.

Often we think of males and females having different objectives in their relationships but fundamentally they are identical. Both men and women want the best partner that they can get. However there are some key problems to this.

1)      You don’t know how attractive to the opposite sex you are compared to others.

2)      Given how attractive you are, what attractiveness can you achieve?

In the diagram above let’s assume guy and gal go on a date, both of them are trying to find out the same things. How attractive am I compared to average woman and how attractive is he compared to the average man and is this a good catch given my attractiveness?

After the date both will consider their relative attractiveness to one another. That is:

Relative Attractiveness = Male Attractiveness Score / Female Attractiveness Score

If the relative Attractiveness score is = 1 then they are a perfect match, they are equally attractive as each other. If the score is greater than one then the male could do better but the female has hit the jackpot. If the score is less than 1 then the female could do better but the male has hit the jackpot.

e.g. assume the average attractiveness = 100

Ra = 100 / 50 = 2

In this scenario the average male goes on a date with a bottom quartile woman. For the female, he is a catch for the male she is a waste of time.

The game therefore is to convince the other player that the Relative Attractiveness score is in their favour but at the same time assess whether the potential partner is the best that they can get.

This is more easily said than done.

Will you marry me!?

Let’s imagine you’ve just been on a date, which went quite well, you’re still not sure on the relative attractiveness score but you think it’s worth another date. Then you get a text message asking you to marry them.

The potential partner has dropped a clanger. She has signalled that the relative attractiveness score is such that you are the jackpot to them, which means you can do much, much better.

Obviously this is an extreme case, but when communicating after a successful date it is crucial that you do not signal a relative attentiveness score that could damage your chances of a second date or a relationship. Equally if you do find a potential partner that scores well on attractiveness you may wish to pursue a second date, but if you signal that intention, you will in turn have an adverse effect on your relative attractiveness score, and this is where game theory comes in.

If both players are aware that they need to signal a higher attractiveness score and at the same time want to go on a second date then there really is a conundrum.

First Mover Disadvantage

Given that communication could adversely affect your relative attractiveness score; there is a serious disadvantage to being the first to initiate communication after a date. In this respect it is best to wait for them to be the first. However if both players are thinking this then neither will ever communicate, which could be a waste if they are a perfect couple for one another. This part of the game is a bit like a game of chicken, where the one who is prepared to sacrifice a second date the most, will come out on top. 

If communication is carefully done so that scores are not affective then you will secure a second date and potentially a relationship.

Don’t go mental!

If you think you have secured a good catch, it is important to act as if you are equals. Don’t talk about baby names, weddings or give any indication that you have considered a lengthy future together in the early days of the relationship. This will send a signal that the partner has made a mistake in his estimation of relative attractiveness nad they will promptly back out.

 Good luck and good gaming singletons!!

Success (part 2): The Role of Chance

Last week’s blog looked at how everyone is in charge of their own destiny. That if we work hard and really apply ourselves, we can succeed at almost anything.  However this is only really telling one side of the success story, for there is a fundamental law of the universe that we all must observe…chance.

The Uncertainty Principle

The universe is fundamentally uncertain; we cannot know where particles are and what their velocity is at the same time. In other words, we cannot predict the future.  To map out our future we can only use probabilities.  

Chance itself though, has a profound effect on all of our lives; from the millions of sperms that could have beat you to the egg, to the place you live, what parents you have and what school you went to, all have shaped and made the person you are today. If there are so many random elements to our lives are we really in control of our own destiny, or are we passengers on a road trip though randomness?  

Right place & right time

In the previous week we saw how Matthew Syed had practiced for thousands of hours to become the UK men’s champion at table tennis. However we failed to focus on the real points that made him successful, we simply concluded that the hours of practice he did made him successful.

But what if Mathew had been born 5 years earlier? He would not have had an older brother to practice with, he might not have had a 24 hour club to practice in, and he may have never started playing table tennis in the first place. 

You might be thinking “ok, so he had a lucky start, but it was his own efforts that got him to where he is”. But think again, what was it that made Matthew so devoted to table tennis?

Initially he played table tennis with his brother because he enjoyed it. By being fortunate to have an older brother and a table to practice on, by the time he went to senior school he had already accumulated a massive head start, from that he was encouraged to go further. This encouragement started a positive behavioural feedback loop, where the more Matthew trained the more positive feedback he received from his coaches and so the more he trained.

Mathew did not wake up one morning and say “I’m going to be a table tennis star and nothing is going to stop me!” he simply went along with the flow and ended up as one.

RGH

Another way of looking at how chance plays a role in our lives and particularly in successful business, is through the Random Growth Hypothesis (RGH ).

The best way to illustrate the RGH is through a simple coin tossing example.

Ten million people enter a coin tossing competition, they all pair up and a toss a coin to decide who will go through to the next round. So after one round there will only be 5 million people left. The eventual winner will have correctly guessed 24 consecutive coin tosses.

To the outside observer it is obvious that the eventual winner has won by chance, but to the individual who won, they will believe that either they have a natural ability at guessing heads or tails or they will believe they have found a pattern for guessing it. (And why wouldn’t they, after all the probability that they just won by chance was 1 in 10 million.)  The theory states, “The eventual winner will be writing books on how to win at coin tossing!”

We often look up to the likes of Alan Sugar and Richard Branson as fantastic business men. But are they good at making business decisions or are they just tossing coins and getting the right answer?

Take the example of John Grisham, his first manuscript A Time to Kill, was rejected by 26 publishers. He was still completely unknown until a bootleg copy of The Firm, found its way into the hands of a director, who brought the rights to make a film on it for $600,000. Once he had some recognition for his work, his future works began to fly off the shelf. Nowadays, John Grisham can write a fairly average book and it will still become a top seller. There are probably far better writers out there, but they have just not been found yet. John may well give lectures on how to be a successful writer but in truth he’s famous because he got lucky.  John is not the only writer to have found success after a long series of rejections. Anne Frank’s diary received several rejections; one comment stating it was “a dull dreary record of typical family bickering, petty annoyances and adolescent emotion. Even if the book had come to light five years ago, when the subject was timely, I don’t think there was a chance for it”.  J.K Rowling received nine rejections before she was signed and Dr Sues, twenty seven rejections. John Kennedy Tole received so many rejections he gave up all hope of ever being a successful writer; he became so depressed he committed suicide.  Eleven years later he won Pulitzer Prize for Fiction and his book, A Confederacy of Dunces, sold over 2 million copies.

Success

This blog has looked at the two aspects of success, hard work and chance. But some conclusions can be made; whilst chance plays a key aspect to success and many of us are not given head starts in life, it doesn’t mean we have to give up on our dreams. We cannot give up and become a John Tole. As much as John Grisham owes much of his success to chance, he didn’t give up, even after twenty six rejections. At times John Grisham must have felt as low as John Tole, but he kept going, he kept writing and he kept on improving himself.

For most of us our careers are already established, our lives seem fixed and unchangeable. Success seems to be for those who are fortunate to have the right parents and the right settings.

But the truth is, if we try hard, dedicate our spare time to our own goals then maybe, just maybe, we’ll get lucky and succeed.