Economic Analysis of Hot-or-Not Online Dating Apps
Chicago’s Hinge Launch Party and an Economic Analysis of
Hot-or-Not Online Dating Applications
A new dating app—Hinge—recently launched in Chicago. Its kickoff party took place at Paris Club last month and was well attended by Chicago Booth students. Hinge positions itself as being like Tinder, which has a reputation for facilitating sexual encounters through its hot-or-not and much talked about swipe-right-to-like interface, except that Hinge positions itself as being “for people who actually want relationships.” Hinge leverages your Facebook account and network in order to match you with friends of friends, which it delivers in daily batches that are proportional in size to the number of friends you have on Hinge. Once your matches arrive, and similar to the way that Tinder works, you either like them or you don’t. Only individuals who like each other are introduced to one another.
Hinge has received mixed reviews. We consider several concepts from microeconomics—network effects, cheap talk, search costs, and signaling—in order to understand how Hinge is attempting to position itself in a crowded marketplace. An economic analysis of Hinge’s interface and value proposition ultimately helps us to understand how Hinge attempts to solve some of the issues that online daters face as well as where it fails to be any different from other platforms. At the end of the day, Hinge turns out to be a nice try, but due to the way that men have learned to use it, ultimately isn’t much different from Tinder.
Hinge’s success, like other online dating services, is dependent upon direct network effects: Any given user’s utility increases as more users sign up for and use the application. By hitching its wagon to a well established social networking site with centrality like Facebook and encouraging users to recruit friends in order to increase their own utility (i.e., the number of matches they get daily), Hinge attempts to mitigate the network effects that
Hot-or-Not Online Dating Applications
A new dating app—Hinge—recently launched in Chicago. Its kickoff party took place at Paris Club last month and was well attended by Chicago Booth students. Hinge positions itself as being like Tinder, which has a reputation for facilitating sexual encounters through its hot-or-not and much talked about swipe-right-to-like interface, except that Hinge positions itself as being “for people who actually want relationships.” Hinge leverages your Facebook account and network in order to match you with friends of friends, which it delivers in daily batches that are proportional in size to the number of friends you have on Hinge. Once your matches arrive, and similar to the way that Tinder works, you either like them or you don’t. Only individuals who like each other are introduced to one another.
Hinge has received mixed reviews. We consider several concepts from microeconomics—network effects, cheap talk, search costs, and signaling—in order to understand how Hinge is attempting to position itself in a crowded marketplace. An economic analysis of Hinge’s interface and value proposition ultimately helps us to understand how Hinge attempts to solve some of the issues that online daters face as well as where it fails to be any different from other platforms. At the end of the day, Hinge turns out to be a nice try, but due to the way that men have learned to use it, ultimately isn’t much different from Tinder.
Hinge’s success, like other online dating services, is dependent upon direct network effects: Any given user’s utility increases as more users sign up for and use the application. By hitching its wagon to a well established social networking site with centrality like Facebook and encouraging users to recruit friends in order to increase their own utility (i.e., the number of matches they get daily), Hinge attempts to mitigate the network effects that