On the surface, the persistence of online dating is somewhat of a mystery. As I explained in this post, online dating should have serious adverse selection problems:
Adverse selection arises when one of the parties to an agreement (the informed party) has private information that is relevant to the agreement, and they use that private information to their own advantage at the expense of the uninformed party. In the case of online dating, the private information is the quality of each potential date. They know if they are high quality or not, but no one else knows. That could lead to a pooling equilibrium, where every online dating subscriber assumes that everyone they are matched with is low quality (because they can't tell the high quality and low quality dates apart, and assuming that every match is high quality is a recipe for disaster). High quality dates don't want to be treated as if they are low quality, so they drop out of the online dating market. Eventually, the online dating market only has low quality dates. The 'market' for high quality dates fails.
The online dating market deals with this through screening (an activity that allows the uninformed party to reveal the private information). Screening is achieved by allowing subscribers to chat with the people they are matched with, which they can use to work out who is high quality and who is low quality. However, screening is imperfect, and costly. And the costs tend to be higher when the average quality is low. So, unless the online dating services can keep the quality of their users high, eventually things will turn out bad for them. And, as I noted earlier, that may be increasingly difficult.
So, it was perhaps inevitable that we would get to a point where even screening is not enough, as reported by the Financial Times this week:
“Trying to engage young women is the biggest struggle for dating apps,” said Rebecca McGrath, associate director for media and technology at Mintel. “Significant gender skew means it is harder for men to find matches and, subsequently, women often become bombarded, making the experience worse for all.”...
The number of paid subscribers on Tinder fell to under 10mn in the three months to March, a sixth consecutive quarterly decline. Monthly active users, the majority of whom use the app’s free services, have fallen steadily since 2021, according to figures from Sensor Tower. Bumble also showed a first-quarter drop in the number of active users, data from the app-tracking service showed, even though paid subscribers remained steady.
The declines in users come as reports increase of so-called dating app fatigue. A survey by Bumble, for example, found that 70 per cent of women using the app had experienced “burnout”...
Match Group’s [chief executive Bernard] Kim said Tinder’s rebrand in 2023 was expected “to have some positive impact on users, particularly women and Gen Z”. He noted however that paid subscriber growth would come primarily from “product innovation”, which includes improving profile quality, moderation and the accuracy of its algorithmic matchmaking.
'Burnout' is one consequence of an increasing cost of screening in online dating. It's becoming more difficult for women to find high-quality matches, and they are starting to switch off. The FT article discusses various ways that the apps are trying to keep women engaged. However, to solve the problem, they need to reduce the cost of screening. The option that may come closest is this one:
Tinder said in February it was expanding its own identity verification programme, which compares a video selfie with a passport or driving licence, as well as the images on a user’s profile. Bumble, which already offered a similar feature, said it had enhanced its “computer vision model for likeness comparison” in the first quarter in order to improve verification.
At the least, that will reduce the impact of fake accounts, bots, and catfishing. However, it still doesn't address the challenge that large language models pose for online dating. I'm still expecting a non-trivial amount of the traffic on online dating apps to become ChatGPT (or Claude or whatever) talking to ChatGPT.
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