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eBaying CMC
In every downturn, there are opportunities. So seems to be the take away from CMC alum, Jonathan Rosenberg’s (CMC ’83) talk at the Athenaeum in which he talked about the “Ubiquity of Information.”
Here are a few ideas that I have been kicking around that might make Claremont McKenna a lot more efficient and fully utilize the creativity of our students.
One such idea would be to use auction markets and web 2.0 tech to allocate housing, classes, and even library books. More precisely, what if we used the opportunity of the loss of Ethan Andyshak, CMC’s housing czar, to design a software system that allocated housing? What would such a system look like?
The current system has more in common with a Soviet-style, planned economy than with a school whose motto is civilization prospers with commerce. There is no commerce, just the credit-based rationing of time slots. But why not level the playing field and let preference, not AP-credits dictate housing? Why not auction off some or all dorm rooms ahead of time, offering students the opporunity to buy the rooms they want, and enjoy the financial benefit? At George Washington University, they did just that and raised thousands for a scholarship fund. CMC could use this to cover the shortfall in financial aid (aid, as I explained in my last post, that will be cut $600,000).
But if you all are repulsed at the idea of money being used, then we could adopt a non-monetary auction.
Wharton, or as I like to call it, the CMC of the East, employs such program for class selection. (Here’s a brief description. And here’s the demo of how the software operates.)
Graduate students at Wharton choose their elective classes using an auction system. Each student is given 5,000 points at the beginning of their career at Wharton which they then use to begin bidding on electives. The most popular classes and professors therefore command the most points. Once a student has “won” a place in a class, they can then auction that place in the class off to other students as a way to get more points for other classes. In essence, getting the classes you want to take at Wharton requires business acumen right from the start.
That sounds all well and good, but how does it live out in the everyday? Here’s how an article in The Chronicle of Higher Education, in an article, jokingly called, “Class Warfare,” describes the process.
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 Wharton takes it one step further, allowing 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.
In other words, Wharton has what may be the most sophisticated, and most confusing, course-registration system ever devised.
And, arguably, the fairest. “It’s capitalism gone nuts, but it’s also absolute socialism because everyone is born with the same number of points,” says Justin Wolfers, an assistant professor of business and public policy.
This hybrid model serves as a perfect template for CMC’s housing process. Dean Fid Castro, the new housing dean, could issue the same number of points to all students, and additional points could be issued for seniority, credits, or even GPA. Like the current system, this system would probably reward older students, but the room assignment process for each year would be very different than the status quo. In the auction, some students would buy up sure bets and hold onto them early on. Others would buy dorm rooms only to sell them later when the demand for those dorms picks up as the days near to the closing of the auction, taking the points for use in future years. And there could be massive rewards for saving points. Students who save could conceivably give or trade their points to other students or wait until their senior year when the odds that they will get their preferred room would be much higher.
But the real fascinating thing would be watching how the market actually plays out. Who wins and who loses? What’s the best play to get the room you want? At least in this system, there would be some strategy and fairness in the housing process, and both could be closely measured by the aspiring finance or economics majors. Moreover, an auction would be able to send signals to CMC’s administration about which dorms are valued and by how much. Future dorms could incorporate features that CMC students like. Thus, this process would help current students, the administration, and even future students.
CMC could be the first school to experiment with auctioning in the Claremont Consortium, but in time, it could be expanded out. Such a system would discourage the students who kiss up to get into classes and give the rest of us a chance at getting the courses we want.
We already know civilization prospers with commerce; we might just prosper with auctions.
14 Comments
2009-06-03
19:03:22
I was around GW during their housing auction--and while it is a good way to raise money, it is hell on earth. But it works--somewhat. The reason it works and doesn't anger too many students is because they auction off a tiny percentage of the "choice" rooms. If CMC followed the successful model maybe 10 rooms would be bought. Wouldn't change much. Good article--and good ideas though.
2009-06-03
22:49:50
we run into the problem of unintended consequences. As any WoW player can tell you (or any gamer playing in plaer based economies) a system like this makes it so some people will obsess over something, give a huge price to it, and in the end, the best profs will have hundreds of students wanting to bid on the class so they can flip it for a little bit more. Then there' ll be the students who also want to take the class, who get screwed by the market hysteria. It just ends up complicating things and adds a lot of stress and needless transactions to a system which may be better off under a more socialist strategy.
2009-06-03
23:13:11
This is a great idea. I can understand why a college wouldn't want to use markets based on money. Although the influence of money is inevitable, a student's ability to spend shouldn't dictate his standing or privileges. However, a market based on something else would be an efficient solution, allocating resources based on the ability and willingness to pay. Determining the ability to pay (i.e. determining how many points a student has available to spend) could be up to the college--either in a quasi-socialist way, as Wharton seems to do it, or in a more meritocratic way, as Charles suggests. To the people who suggest that the current room draw lottery is desirable because it's equitable: having an equal chance of getting a windfall or getting screwed by the system is a far worse quality than having an equal ability to decide what you want and act accordingly.
To the above poster: speculators will have incentive to not actually take classes or live in rooms they were hoping to flip. Whichever students want to take the class the most will end up paying the most, at the end of the day (or before move in, or before the first day of classes,) and the speculators will get out.
2009-06-04
10:11:17
This isn't a perfect neoclassical and/or theoretical economic system. It is a real system with real people with empirical support behind it. While it is true that the students who pay the most get their class, there is going to be a huge premium paid for the top professors and a whole crazy trading system of credits which will encourage tons of people to apply for limited spots. Think of the whole college selection process and apply that to every premium class you take. I for one would prefer our "inefficient" system to the craziness of this proposed system. If there was no trade of points, then I see this being feasible though I prefer the status quo.
Then there is always the problem of taking classes for a major. Many classes fill up early and can't be taken until your later years. This is fine as if I need a class to graduate, I can take it later. Under a credit system, people can run out of credits so they can never take that premium major class, or some majors will never be able to be finished due to lack of credits or due to how much major classes cost. This doesn't even take into account any market hysteria from classes which are annually overbooked. I'm looking at you JSD! Think of all those crazy chem majors who can't take ochem because every class is full. This bids the market price up but since their is so much demand and limited supply, the market price gets bid very high. Now I don't know anyone who is taking ochem for fun, so demand doesn't ever really diminish but an increased price locks some people out of taking the class. So we now have people who can't complete a major because they are priced out.
If there was a way in which credits allowed supply to rise, then we'd solve this issue but I don't see that ever happening.
2009-06-03
23:14:23
Oh, and money shouldn't determine ability to pay because most money for most students (I realize there are exceptions) is their parents, and doesn't really reflect anything about the student himself.
2009-06-04
05:40:31
Definitely NOT a good idea. I admit that the current system has its flaws. But by the time you are a senior, you can pretty much get what you want. And let's be honest. It's not that bad...
There's a couple things that are wrong with your idea. First of all, although it might be of great interest to all the business and econ oriented people at cmc, I am sure a lot of people would have no interest or understanding in this and would end up getting screwed. It also seems to force choosing between where you want to live and what classes you want to take. If you spend all your "points" on good classes everyone would like to get in to, then you won't have many left when it comes to choosing your room, and vice versa.
True some people get screwed with the system we have. But it promotes not falling behind on credits and makes us look forward to being a senior.
2009-06-04
11:30:27
how about just transitioning to an online registration system like they have at every other college in the whole country? then registration times could be staggered so that you register for one or two classes at a time and thus could prioritize. also, we'd be helping the budget situation by getting rid of the 4 ladies in the registrars office that dont seem to do anything outside of the registration period every semester (but make sure to keep lizzy morgan!!).
2009-06-04
11:45:04
Hey Kale,
Thanks for giving first hand evidence of the system at GW. I think a way not to stigmatize the richer kids would be to have the auction system be online so that few people knew who those rich kids were. Otherwise, I think you’d have to limit it to only several dorm rooms on campus.
And you could conceivably auction it for spots in the line, not particular dorm rooms. Keeping it quiet and using a Dutch auction, as opposed to a Japanese auction, would be better.
Still Feeling Guilt From Pedro,
I’m well aware of the consequences of this. Isn’t WoW’s internal economy cool? Well, in any event, let’s assume that the freaks come out of the woodwork and start trading and creating all these options or derivatives, etc. Would that necessarily be a bad thing? For students that eschew complicated things, you could encourage those students to be your auction broker and could conceivably pay them in credits! Just because an idea is complicated doesn’t mean that there aren’t simple and creative solutions that could emerge. As Bill puts it rather rightly, speculators would have an incentive not to get stuck in the rooms. After all, they could presumably not purchase multiple rooms at once. (Although, maybe they should…. Hm….)
You could theoretically design computer programs that would set thresholds based upon when to sell your class or when to buy it. Many students already trade on the stock market. This system would just encourage them and may even encourage many of them to learn about markets so that when they’re dealing with the stock market or other markets later on, they’ll have an advantage.
The current system actually encourages students to take extraneous courses over the summer to get higher credit numbers. I had this problem last semester. I was .5 credits away from being in a higher level and therefore having a higher room draw number, but I got screwed, falling near the bottom of the pack. People with fewer credits than I had, got to pick rooms before I did. Of course, there must be a better way to reform that system. Maybe having a room draw with each half credit or single credit? I think that such a process of more and more credits is entirely unfair to poor students who must work during the summers to continue affording CMC, but that’s just the system that we have.
Bill,
Thanks for the compliments. This remarket is right on the money, so to speak: “having an equal chance of getting a windfall or getting screwed by the system is a far worse quality than having an equal ability to decide what you want and act accordingly.”
@Bill,
You’re exactly right. I’m counting on the huge premium paid for the top professors. In fact, I want it because what it does is send signals to the tenure committee, to the other professors, and to the students about which courses are valued and which are not. This might help the college better allocate resources than it does currently between the departments. If every student wants to take organic chemistry, the college will see that and allocate the resources efficiently by hiring more O. Chem professors. Demand will create supply.
There will be an incentive for students not to spend their credits. If not, they could be rolled automatically into whatever GEs they still need to complete. This would suck because some people would make poor decisions, but that would encourage people not to bid things up too crazily.
Anonymous,
I totally disagree with you. The current system sucks for room draw and it’s only marginally better for your classes. Many families have to spend money over the summer to help their kid get classes at community or college in order to graduate. You should be able to get a dorm room where there was no pot smoking or drinking. The demand for Stark, for instance, is at an all time high as the number of students increase under Gann’s plan. Whereas juniors used to be able to get a single in the Towers without a problem, they just cannot now. It will probably get a lot worse in the future.
I think you misread me. I don’t believe the auction market should use the same currency for housing and classes. Obviously that would create problems and probably incentivize a lot of students to move off campus to get the classes they wanted. I wasn’t calling for that.
Nathan,
Thank you for writing what I didn’t have the courage to say. (In part, I think this kind of an auction would lead to a centralization of registrars that only help you when you have a serious problem, rather than the current model.)
2009-06-04
11:55:09
First, professors would never let us bid on their classes, which would establish an explicit hierarchy of professors based on popularity-- it poses an obvious potential challenge to their teaching reputation, among other things. Unfortunately, CMC faculty would need to approve of any change in our registration process.
But let's say it was allowed-- it would not work the way Wharton does it because students are encouraged to follow their interests as they take more credits and discover what they like. A system that works for highly competitive and specialized 25-30 year olds shouldn't be thrown at 18 year old liberal arts students who shouldn't have any idea what courses they'll want to be taking a year from now.
As for both the class and housing registration processes themselves, both should be online, yes, but our IT staff is way understaffed.
2009-06-04
12:03:32
Hey Josh,
I agree with the first, but I think that if you said to some of the professors that it will allow us to see which classes are actually well received some of them may prefer that system... particularly the ones that were tenure seeking. They would have a feedback mechanism much better than the current B.S. forms we fill out.
As for the Wharton example, the article above also mentions an undergraduate institution that does it -- Colorado College. http://chronicle.com/free/v54/i23/23a00103.htm. Colorado College is a peer liberal arts college. It might be instructive to look at how those students manage.
I don't think that there's such a big deal about the age differences. Some students don't know what they want to study, sure, but maybe this system would encourage them to be a bit more serious about their education and to decide a little bit before they came to college. They cannot be a bad thing. Of course we routinely let people make decisions about their life when they are over the age of 18 that they cannot take back. The schools allows people to join ROTC, to engage in promiscuous behavior, to drink (semi) legally, etc. I think your fears are misplaced.
And finally, I agree with the final statement. We do need to do a better job with IT staffing.
2009-06-04
12:30:32
No, Colorado College is not doing what Wharton is doing-- CC students are given points each year, not once in their freshman year, which is a significant difference and shows that the school does not want students to be stuck with bad decisions they made their freshman year. Personally, I love Colorado College's system and think CMC should adopt a similar one.
Also, Colorado College is very different than CMC's academic system. CC has a unique course schedule under the "block" system in which students take one course at a time over a few weeks, then switch to another course.
http://www.coloradocollege.edu/academics/FYE/points.asp
To the point about professors-- they want a feedback mechanism, but they don't want one that public. You'll see what I mean if anything like that comes up in the curriculum committee meetings.
2009-06-04
13:05:05
Agreed. The systems are similar in that they both use markets, but I would prefer the Wharton model to the Colorado College model. It would also seem to me that you're overselling the problems that younger students would face. Most of them would want to take GEs anyways and so it might as well be random the order in which they take them. Moreover, they'll have an incentive to save their points until later.
As the link you put up says,
"Students need to set priorities. If you really want a course in high demand, you must decide whether or not you should use most of the points for the course and take your chances on the other blocks. Prioritize the courses which you have selected, identifying the courses you "absolutely" have to take versus those which are less important for your course schedule. The allocation of points for the proposed schedule would then follow this priority list."
It seems Wharton's system would do well for us.
As for the professors, my cousin's wife is a professor at Wharton. http://www.wharton.upenn.edu/faculty/williams.html. She says that both professors and students like the system, but that popularity for the program changes with the number of years spent in the program.
2009-07-18
21:12:23
I like the system as a concept. I also like what Colorado did. It gives students a buffer if they screw up freshman year. Maybe a hybrid of the two? Have a complete Whartonesqe auction junior year onwards while using the Colorado system for the 1st two years... But as I was saying, it sounds good as a concept...
What about science majors though? They are required to take most classes in a particular order... If for some reason O-Chem fills up, that person's gonna have to put it off by a year, potentially jeopardizing his graduation...
I understand your argument about the college realizing that there's more demand for O-Chem and thus staffing it up, but those things take time... Eventually, it should work out for science majors. But what about the 1st few guinea pigs who are put through the process? These are lives here that you are playing with...
Also, I'm against internal trading among students. This would artificially spike up the prices for classes by creating artificial demand from people who don't need the class based on speculation of future demand from people who will need it. While that may work for the stock market (or not), it is not called for when people are actually trying to register for classes...
Also, like Josh was saying, most professors would not like such a public feedback system. maybe some professors will be ok with it (like your charles' cousin's wife), but most wouldn't...
That said, moving away from classes, applying the Wharton system to housing is definitely something that CMC should consider. The various dorms hardly have feelings thus eliminating the emotional aspect of the bidding process. And the bidding system now would ensure that instead of leaving our housing to chance, we can have a say in what we choose to do... I see no demerits whatsoever in using this for housing, nor did I see any bought up in the comments so far...
Josh: Assuming that this system is better for housing (that can be debated later - assume for now that it is), Can the ASCMC can suggest changes like these to the administration?
2009-07-18
21:16:57
Whoops.
Just saw the date on the article... Guess I'm a tad bit too late :p
Also, typo: *Charles' cousin's wife (minus the your)