Lotteries vs. Auctions for College Classes

From The Chronicle of Higher Education (subscription required):

For its humanities requirement, MIT asks students to rank the courses they'd most like to attend. If your No. 1 class is not in demand, then you're in. But if that class is overenrolled, a computer program chooses randomly among all the students who ranked that class as their first choice.

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.

Serban Suvagau bought a seat in a finance course this semester for 200 points. A couple of days later, he sold it for 900 points. Mr. Suvagau, a second-year student, wasn't really trying to make a profit. He just changed his mind. But he's made some shrewd moves in the past, and he began this semester with a solid 7,800 points.

Mr. Suvagau thinks an auction is more fair and efficient than, say, a lottery, but the process can still be annoying, especially if you get outbid. "Complaining about the auction is a big pastime," he says.

It's common knowledge among students which classes sell for a premium and which can be picked up for a song. Professors with more star power command higher prices. It also has to do with how many seats are available. If you restrict your class to 10 students, your price will most likely rise.