Week 2: Discovery & Search Costs

Why looking for a partner is a search problem, and why every search technology changes the answer

28 February 2028

Open the slides

Search has a cost: time spent evaluating one candidate is time not spent finding a better one, and the moment you stop looking is a decision, even when it doesn’t feel like one. A search technology — a friend group, a workplace, an app — doesn’t just supply candidates, it sets the cost of finding them, and the cost function determines the strategy that makes sense.

This is the week that reframes “why is dating so exhausting” as a modeling question rather than a complaint: a lower per-candidate search cost doesn’t just mean more options, it changes what an optimal stopping rule looks like. Week 6 does the math properly; this week sets up why the math matters.

Take Priya, who meets people almost exclusively through her state trivia league — five new candidates a year, tops, but every one of them has already self-selected for showing up on a Tuesday night and knowing who wrote Middlemarch. Her flatmate Dev runs six apps at once and reports “matches” the way other people report weather. Same underlying market, two completely different cost functions — and, as this week argues, two completely different optimal strategies follow from that difference alone, before either of them has said a single charming thing to anyone.

Outline#

• search cost as a function of channel: cost per candidate, signal quality, false positive rate
• why “more options” is not obviously an improvement
• the difference between a search problem and a matching problem, and why this course spends three more weeks on the former before it earns the latter

Further reading#

The search-cost framing above isn’t new to this course; it’s the founding move of an entire field of economics:

• Stigler, G. J. (1961). “The Economics of Information.” Journal of Political Economy, 69(3), 213–225. The paper that first treated “finding out prices” as an economic activity with its own cost, rather than something markets simply hand you for free.
• Roth, A. E. (2008). “What Have We Learned from Market Design?” The Economic Journal, 118(527), 285–310. The source of “thickness, congestion, and safety” as the three things a marketplace needs — and of the specific claim behind today’s “more options isn’t obviously better” slide: a thicker market can fail on congestion even when it doesn’t fail on numbers.