Friday 15 February 2008

Whats your class worth?

The Chronicle of Higher Education has a report on ways that universities allocate students to classes.

At the University of Chicago you aren't allowed to sell your place in a class but "... the University of Pennsylvania's Wharton business school actually encourages it."
Wharton auctions spots to its M.B.A. students, allowing them to bid for their classes. They don't use real money; instead, students are each given 5,000 points when they enroll and 1,000 more for every credit they earn. An average course might sell for a few hundred points while the most sought-after ones can top 10,000.
But they go even further at Wharton, they allow students to sell their courses (for points) to other students.
It's all done through a Web site. Buyers and sellers are anonymous, so buddies can't make deals. Wharton also uses a second-price auction in which the highest bidder wins, but he or she pays the amount of the second-highest bid. Economists like the second-price auction because they think it encourages more honest bidding
The Chronicle points out that
Because students can place a numerical value on a class, they're better able to express their preferences. If one student bids 500 points and another bids 2,000, then it's clear, in theory, who wants it more.
Student take it seriously. Students study data from the previous semesters and try to outsmart their classmates. In fact some students try to game their fellow students,
Students regularly buy classes they don't want to take in hopes of selling them, making a profit, and using those points to buy classes they really do want.
Not that such an approach is allowed everywhere. As noted above, administrators (who else?) at the University of Chicago won't let you sell your place in class. We know since a women tried to sell her place in an economics class taught by Steven D. Levitt on line, and the administrators stopped her. What did Levitt think? He reports that
I liked her approach, though, so we’ve now got her employed doing research assistance for the sequel to Freakonomics.

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