Tag: focal points

The market for gay relationships

The market for homosexual relationships is an interesting one from the analysis perspective. Like the market for heterosexual relationships, it is a matching market (we are in a relationship if and only if I like you AND you like me). Unlike heterosexual relationships, it is not a “bipartite” market, since both the nominal “buyer” and the “seller” in a transaction will come out (no pun intended) of the same pool (gay people of a particular sex).

The other factor that makes this market interesting (purely from an analysis perspective – it’s bad for the participants) is that there is disapproval at various levels for homosexual relationships. Until today, for example, it was downright criminal to indulge in gay sex in India. Even where it is legal, there is massive social and religious opposition to such relationships (think of the shootout at the gay bar in Florida, for example).

Social disapproval has meant that gays sometimes try to keep their sexuality under wraps. Historically, it has been a common practice for gays to enter into heterosexual marriages, and pursue relationships outside. In fact, there is nothing historical about this – read this excellent piece by Srinath Perur on gays in contemporary hinterland Karnataka, for whom Mohanaswamy, a collection of short stories with a gay protagonist, was a kind of life changer.

Organising a market for an item that is illegal, or otherwise frowned upon, is difficult, since people don’t want to be found participating in it. If I were a gay man looking for a partner, for example, I couldn’t go around openly looking for one if I didn’t want my family to know that I’m gay. So the first task would have been discovery – “safe spaces” where I would be happy to expose my sexuality, and where I could also meet potential partners.

When demand and supply exist, buyers and sellers will find a way to meet each other, though often at high cost. One such “way” for homosexual people has been the gay bar. Though not explicitly advertised, such bars act as focal points (I have a chapter on focal points in my book) for gay people.

They also act as an “anti focal point” (a topic I HAVEN’T covered in the book, for a change!) for heterosexual people who want to stay away because they don’t want to be hit on by gay people (thus reducing market congestion – another topic I cover in my book). Similarly other cultural activities have acted as focal points for gay people to get together and meet each other.

Like in heterosexual relationship markets (this is the link to a sample chapter from the book), the advent of dating apps has revolutionised gay dating, as apps such as Tinder and Grindr have provided safe spaces where gays can look for relationships “from the comfort of their homes”. There are studies that show that Grindr has changed the nature of relationships among gay men, and how these apps have “saved lives” in places such as India where homosexuality was criminal until today.

Today’s Indian Supreme Court ruling will have a massive positive impact on gay relationships in India. For starters, there are still millions of people in the closet – while apps such as Tinder and Grindr allowed more people to participate in these markets (since this could be done without really “coming out”), that gay sex was a criminal act would have led to some people to err on the side of caution (and deprive themselves of the chance of a relationship). Gay people who were worried about criminality, but not that much about social sanctions, will now be more willing to come out, leading to an increase in the market size.

Barring congestion (when “bad counterparties” prevent you from finding “good counterparties”),  the likelihood of finding a match in a market is generally proportional to the number of possible counterparties. Since gay relationship markets are not bipartite, we can say that the likelihood of finding a good match varies by the square of the number of market participants (and this brings in the Indian Prime Minister’s infamous 2ab term). In other words, it not only allows the people now coming into the market to find relationships, but it also allows existing players to find better relationships.

Then, there is the second order effect. Decriminalisation will mean that more people will come out of the closet, which will mean more people will find homosexuality to  be “normal” leading to better social mores (to take a personal example, I used to use the word “gay” as a pejorative (to mean “uncool”) until I encountered my first openly gay acquaintance – someone with whom I share on online mailing list). And as social attitudes towards homosexuality change, it will lead to more people coming out of the closet, setting off a virtuous cycle of acceptance of homosexuality.

In other words, today’s decision by the Indian Supreme Court is likely to set off a massive virtuous cycle in the liquidity of the market for homosexual relationships in India!

PS: It is a year since my first book was published, so we are running a promotional offer where you can buy the Kindle version for one dollar (or Rs. 70).

 

More on focal points at reunions

On Friday, just before the IIMB reunion started, I had written about reunions being focal points that help a large number of alumni to coordinate and meet each other at a particular date and venue. What I’d not written about there was the problems that could potentially be caused with the said venue being large.

In this case, the venue was the IIMB campus itself. While all official events, meals and accommodation for outstation attendees had been arranged in a single building (called MDC), the fact that people would explore the campus through the event made the task of coordination rather difficult.

The whole point of a reunion is to meet other people who are attending the event, and so it is important that people are able to find one another easily. And when the venue is a large area without clear lines of sight, finding one another becomes a coordination game.

This is where, once again, Thomas Schelling’s concept of Focal Points comes in. The game is one of coordination – to land up at locations in the venue which maximise the chances of meeting other people. While our class WhatsApp group enabled communication, the fact that people wouldn’t be checking their phones that often during the reunion meant we could assume there was no communication. So when you arrived at the venue, you had to guess where to go to be able to meet people.

Schelling’s theory suggested that we look for the “natural, special or relevant” places, which would be guessed by a large number of people as the place where everyone else would coordinate. In other words, we had to guess what others were thinking, and what others thought other others were thinking. Even within the reunion, focal points had become important! The solution was to search at those specific points that had been special to us back in the day when we were students.

On Saturday morning, I took about ten minutes after entering campus to find batchmates – I had made poor guesses on where people were likely to be. And once I found those two batchmates at that first point, we took a further twenty minutes before we met others – after making a better guess of the focal point. Given that the reunion lasted a bit more than a day, this was a significant amount of time spent in just finding people!

 

 

A simpler solution would have been to start with a scheduled event that everyone would attend – the venue and starting time of the event would have defined a very obvious focal point for people to find each other.

And the original schedule had accommodated for this – with a talk by the Director of IIMB scheduled for Saturday morning 10 am. It seemed like a rather natural time for everyone to arrive, find each other and go about the reunion business.

As it happened, revelry on the previous night had continued well into the morning, because of which the talk got postponed. The new starting point was to “meet for lunch around noon”. With people who were staying off-campus, and those arriving only on Saturday arriving as per the original schedule, search costs went up significantly!

PS: This takes nothing away from what was finally an absolutely fantastic reunion. Had a pretty awesome time through the duration of it, and I’m grateful to classmates who came from far away despite their large transaction costs.

The purpose of reunions

So later today and tomorrow, the class of 2006 at IIMB is going to have a reunion. Reactions to this have been mostly mixed. Some people have been excited about it for months together. Some have been dismissive, loathing the idea of meeting some people they used to know. Most have gone along with the flow, quietly registering and promising to turn up.

As I’ve dealt with people showing all these reactions, I was thinking of why reunions make sense. I had even tweeted this last year:

As the reunion has come closer, though, my views have become more nuanced. Yes, I’ve kept in touch with all those batchmates I’ve wanted to keep in touch with. However, transaction costs (have I told you I’m writing a book on that topic? Just wrapped up third draft) mean that it’s not been possible to meet many of them.

It is not feasible, for example, to schedule a trip all the way to London because a handful of people you want to meet live there. Nor is it possible that even if you visit Mumbai, regularly, you are able to put “gencu” with everyone you have intended to put gencu with.

And so it remains, that you keep putting off meeting those people you want to meet until a time when transaction costs are low enough for you to be able to meet.

There are transaction costs that operate in other ways as well – a scheduled bilateral meeting is a commitment to exclusively talk to each other for at least close to an hour. And sometimes when you want to meet someone for the purpose of catching up, you aren’t sure if you can spend an hour with them without either of you getting bored. And so you put off that gencu.

The beauty of a scheduled reunion is that it takes into account both these costs. Firstly, by ensuring a large number of people congregate at one place at one time, it amortises (among all the counterparties you meet) the cost of having travelled to the meeting. Secondly, given that there are so many people around there, you don’t have an obligation to talk to anyone beyond the time when it’s pleasant for both of you (sadly, IIMB has outlawed alcohol on campus during the last decade so “i’ll go get a refill” trick of walking away won’t work).

The other great thing about a scheduled reunion (organised by the Alma Mater’s alumni office) is that it acts as what Thomas Schelling termed as “focal points“. Focal points are basically solutions to coordination games where each player plays in a natural or obvious way, expecting others to play the same way as well, so that they coordinate.

Now let’s say that the IIMB Class of 2006 decided to all meet sometime during the course of the year. Coordinating on a date would have been impossible, with any arbitrarily chosen date attracting too few people for network effects to take effect.

With the alumni office proposing a date and venue, it now becomes an “obvious solution” to everyone coming together and going through a process on that date (anchoring is also involved). People are willing to make the investment to meet on that date because they expect others to be there as well. So I’ve registered for this weekend’s event with the expectation that a large number of my batchmates would have done so as well, and each of them would have in turn registered for a similar reason.

Over the next couple of days I expect to spend a lot of time with people I’ve anyway been in touch with over the last 10 years. I might also spend a small amount of time with people I don’t really want to meet. But there is a large number of people I want to keep in touch with, but can’t due to transaction costs, and that is where I expect the reunion to add most value!