Course Registration Auctions Zachary Schutzman Presented May 2016

Course Registration Auctions Zachary Schutzman Presented May 2016

What is a course registration auction? Students use fictional currency to bid on course seats

What is a course registration auction? Students use fictional currency to bid on course seats Potentially scarce good

What is a course registration auction? Students use fictional currency to bid on course seats Potentially scarce good Ghosh paper

Things to think about

Things to think about Is it fair?

Fairness Do two identical students have the same access to information and resources?

Fairness Do two identical students have the same access to information and resources? Students paying real money for advance registration

Fairness Do two identical students have the same access to information and resources? Students paying real money for advance registration A professor allows a student to move up the waitlist

Things to think about Is it fair? Is it efficient?

Efficiency Do the students with the highest preference for a course get a seat in that course?

Efficiency Do the students with the highest preference for a course get a seat in that course? Total lottery is fair, but not efficient

Efficiency Do the students with the highest preference for a course get a seat in that course? Total lottery is fair, but not efficient Random pruning also ignores preferences

Things to think about Is it fair? Is it efficient? Does it elicit honest preferences?

Honest preferences Do students’ bids reflect their relative valuation for a course?

Honest preferences Do students’ bids reflect their relative valuation for a course? If a student values Courses A and B equally, but knows B will not fill up, she should spend all of her points on A.

Honest preferences Do students’ bids reflect their relative valuation for a course? If a student values Courses A and B equally, but knows B will not fill up, she should spend all of her points on A.

Things to think about Is it fair? Is it efficient? Does it elicit honest preferences? Is it easy to understand?

Easy to understand Are the rules of the auction straightforward and simple enough for all students to participate?

Easy to understand Are the rules of the auction straightforward and simple enough for all students to participate? We don’t want suboptimal outcomes to result from students misunderstanding the auction formats.

Some examples

Some examples Colorado College

Some examples Colorado College Kellogg School of Business (Northwestern)

Some examples Colorado College Kellogg School of Business (Northwestern) Wharton School of Business (UPenn)

Some examples Colorado College Kellogg School of Business (Northwestern) Wharton School of Business (UPenn) Booth School of Business (UChicago) Harvard Kennedy School of Government MIT Sloan School of Management Harvard Business School [draft] NYU School of Law

Colorado College

Colorado College Small liberal arts school in Colorado Springs

Colorado College Small liberal arts school in Colorado Springs Uses a “block” course calendar

Colorado College Course Auction

Colorado College Course Auction Students are allotted 80 points with which to bid for a full year

Colorado College Course Auction Students are allotted 80 points with which to bid for a full year Multi-unit, simultaneous, first-price, sealed bid

Colorado College Course Auction Students are allotted 80 points with which to bid for a full year Multi-unit, simultaneous, first-price, sealed bid Students have access to the full anonymized results from previous years

Colorado College Course Auction Students are allotted 80 points with which to bid for a full year Multi-unit, simultaneous, first-price, sealed bid Students have access to the full anonymized results from previous years Waitlists are ordered by bid amount

Colorado College Course Auction Students should use all of their points

Colorado College Course Auction Students should use all of their points Looks like weighted preference, but does not elicit honest weights

Colorado College Course Auction Students should use all of their points Looks like weighted preference, but does not elicit honest weights All students get 80 points, even those studying abroad

Kellogg Course Auction

Kellogg Course Auction Students are allotted a fixed budget of points for the year Varies based on student status (full-time get more than part-time/evening)

Kellogg Course Auction Students are allotted a fixed budget of points for each term Varies based on student status (full-time get more than part-time/evening) The auction occurs by term and unused points are carried over

Kellogg Course Auction Students are allotted a fixed budget of points for each term Varies based on student status (full-time get more than part-time/evening) The auction occurs by term and unused points are carried over There are two rounds of auction with opportunity for section switching and dropping in between

Kellogg Course Auction Students are allotted a fixed budget of points for each term Varies based on student status (full-time get more than part-time/evening) The auction occurs by term and unused points are carried over There are two rounds of auction with opportunity for section switching and dropping in between Courses are sold at a clearing price rather than each student paying their bid

Kellogg Course Auction

Kellogg Course Auction Points are carried over, so prices should rise as terms progress

Kellogg Course Auction Points are carried over, so prices should rise as terms progress The clearing price rule should elicit more honest preferences

Kellogg Course Auction Points are carried over, so prices should rise as terms progress The clearing price rule should elicit more honest preferences Refunds mean there are no negative consequences to bidding on and winning two courses that meet simultaneously

UPenn Wharton Course Auction (RIP)

UPenn Wharton Course Auction Students begin with an endowment of points at enrollment

UPenn Wharton Course Auction Students begin with an endowment of points at enrollment The course auction is single round, sealed bid with a clearing price

UPenn Wharton Course Auction Students begin with an endowment of points at enrollment The course auction is single round, sealed bid with a clearing price Points are earned by completing courses and.

UPenn Wharton Course Auction Students begin with an endowment of points at enrollment The course auction is single round, sealed bid with a clearing price Points are earned by completing courses and By buying and selling seats in an open market

Wharton Course Market

Wharton Course Market Occurs over several rounds of bid/ask

Wharton Course Market Occurs over several rounds of bid/ask Works kind of like a stock market where the bid/ask spread is used to determine a clearing price PRICE BID (buyer) ASK (seller) 500 1 5 400 2 4 300 3 3 200 4 2 100 5 1

Wharton Course Market Occurs over several rounds of bid/ask Works kind of like a stock market where the bid/ask spread is used to determine a clearing price Potential to earn or lose a lot of points

Wharton Course Market Occurs over several rounds of bid/ask Works kind of like a stock market where the bid/ask spread is used to determine a clearing price Potential to earn or lose a lot of points Results in efficient allocation of seats, but not very intuitive

A Course Auction for Colby?

A Course Auction for Colby? There are some ‘issues’ with Colby’s course registration process that an auction could help reduce.

A Course Auction for Colby? There are some ‘issues’ with Colby’s course registration process that an auction could help reduce. Some courses have higher demand than others Intro stats, bio, chem, econ “Bottleneck courses” (econ theory, research methods, organic chem) Hard limit specialty courses (labs, GIS, etc)

A Course Auction for Colby? There are some ‘issues’ with Colby’s course registration process that an auction could help reduce. Some courses have higher demand than others Intro stats, bio, chem, econ “Bottleneck courses” (econ theory, research methods, organic chem) Hard limit specialty courses (labs, GIS, etc) Waitlists are not centralized

A Course Auction for Colby? There are some ‘issues’ with Colby’s course registration process that an auction could help reduce. Some courses have higher demand than others Intro stats, bio, chem, econ “Bottleneck courses” (econ theory, research methods, organic chem) Hard limit specialty courses (labs, GIS, etc) Waitlists are not centralized Weakly dominant strategy to register for extra courses

Things we want:

Things we want: Students should register for the courses they want to take

Things we want: Students should register for the courses they want to take We don’t want students wasting points on courses that don’t fill

Things we want: Students should register for the courses they want to take We don’t want students wasting points on courses that don’t fill The process needs to be understandable for incoming first years

Designing an auction

Designing an auction Step 1: Students register for the courses they want to take

Designing an auction Step 1: Students register for the courses they want to take Step 2: The registrar notifies students who registered for over-enrolled courses

Designing an auction Step 1: Students register for the courses they want to take Step 2: The registrar notifies students who registered for over-enrolled courses Step 3: These students are allocated a non-transferrable, non-bankable endowment with which to bid on these courses

Designing an auction Step 1: Students register for the courses they want to take Step 2: The registrar notifies students who registered for over-enrolled courses Step 3: These students are allocated a non-transferrable, non-bankable endowment with which to bid on these courses Step 4: The auction is resolved by awarding seats to the highest bidders

This auction: Doesn’t require bids on under-enrolled classes

This auction: Doesn’t require bids on under-enrolled classes Should more honestly elicit preferences by only requiring bidding on full courses

This auction: Doesn’t require bids on under-enrolled classes Should more honestly elicit preferences by only requiring bidding on full courses Allows certain groups to still have priority by biasing bids or awarding extra points

Conclusion More efficient allocations Less strategic manipulation Fair treatment of all involved