Markets in Everything: Bidding for MBA Classes
The Chicago Tribune reports that MBA students at Kellogg (Northwestern), Booth (Chicago) and Wharton (Pennsylvania) now all use bidding systems for graduate business classes as a way to allocate scarce resources and even provide a lesson in economics for course registration:
"Armed with an identical number of points at the outset, students spend them bidding against each other for spots in classes. Popular professors and classes cost more — in some cases, we're talking Rolls-Royce prices. For instance, to get into Victoria Medvec's winter 2010 negotiations course at Northwestern University's Kellogg School of Management, students had to bid a minimum of 1,452 points, or nearly half of the 3,000 points they're allotted for the entire year. It was Kellogg's most expensive course in the last four quarters during Round One of bidding, at least.
At Booth, students get 8,000 points to start and 2,000 more for every course they complete. Multiple factors — class size, length, time, day of the week, topic and how many times a year it's offered — can buoy a price. Students at both schools also can log in to websites and see the historical prices for courses.
At both schools, courses "sell" for the price of the lowest successful bid. Many classes — say, ones held at 8:30 a.m. Fridays — do not fill up during the first round of bidding, which means they sell for zero. Classes that do not sell out go up for auction in subsequent rounds. The students bidding in those rounds are the ones who didn't bid high enough the first time to get into every course they wanted.
HT: Peter Parlapiano
8 Comments:
You know, I proposed something like this to one of my old profs about 20 years ago. Glad to see it's happened somewhere, and that it works similar to what I envisioned.
If anyone wants to steal the rest of my idea,here it is: Have the college (or some patron/investor) put up the money for any student wanting to attend. In exchange, the student guarantees some percentage of his income for some amount of time (the conditions and term would be negotiable, based on the degree and the student's accomplishments, test scores, etc.) so that ANY kid with aptitude, regardless of where he grew up, what color he is, etc. could get into college.
The investors will then back those students who have the most potential and, as with many venture capital companies, will take extra steps (e.g. tutoring and making sure they student stays out of trouble) to ensure the success of the student (the investment).
I will have investment opportunities available in the fall of 2017 and the fall of 2024 for anybody interested in making such investments ;^).
Reminds me of an article.
Introduction (excerpts):
The Economic Organisation of a P.O.W. Camp
R. A. Radford, Economica, vol. 12, 1945
After allowance has been made for abnormal circumstances, the social institutions, ideas and habits of groups in the outside world are to be found reflected in a Prisoner of War Camp. It is an unusual but a vital society.
Everyone receives a roughly equal share of essentials; it is by trade that individual preferences are given expression and comfort increased.
Between individuals there was active trading in all consumer goods and in some services. Most trading was for food against cigarettes or other foodstuffs, but cigarettes rose from the status of a normal commodity to that of currency.
RMk.s existed but had no circulation save for gambling debts, as few articles could be purchased with them from the canteen.
Our supplies consisted of rations provided by the detaining power and (principally) the contents of Red Cross food parcels – tinned milk, jam, butter, biscuits, bully, chocolate, sugar, etc., and cigarettes.
So far the supplies to each person were equal and regular. Private parcels of clothing, toilet requisites and cigarettes were also received, and here equality ceased owing to the different numbers despatched and the vagaries of the post. All these articles were the subject of trade and exchange.
We reached a transit camp in Italy about a fortnight after capture and received 1/4 of a Red Cross food parcel each a week later. At once exchanges, already established, multiplied in volume.
Starting with simple direct barter, such as a non-smoker giving a smoker friend his cigarette issue in exchange for a chocolate ration, more complex exchanges soon became an accepted custom.
Stories circulated of a padre who started off round the camp with a tin of cheese and five cigarettes and returned to his bed with a complete parcel in addition to his original cheese and cigarettes; the market was not yet perfect.
It was realized that a tin of jam was worth 1/2 lb. of margarine plus something else; that a cigarette issue was worth several chocolates issues, and a tin of diced carrots was worth practically nothing.
I like your idea Don. But it may be too much trouble for a university to handle. Instead, they'd outsource it to a creditor or a bank, and you'd end up pretty much with a system similar to what we have today, except that available credit for education, and subsequent payments, would depend on the individual student. (as opposed to today where they are pretty standard). That alone would improve the system considerably, and drive better use of education resources.
As for the idea of points to register for MBA classes, I like that too. Except I don't see why everyone is starting off with the same points. As long as fast-track MBA students get preference (like I was), then I'm ok with it :P
Big deal we did this at Chicago in the 80s. This is as old as the hills. We also bid Dutch Auction style for employer interviews. 30 years ago.
AIG, not a bank (specifically) but a broker. The banks would make the loans for those who's grades are too poor to get direct funding.
And the difference between what is described here and what I suggested was that the profs would ALSO get a vote in what students they took. My system suggested that profs (and the school itself) were investors and had a personal stake in the success of the students. If a prof knew that a student was a waste of his time and had better students bidding for his class, he could choose to pass over a student that he thought was a bad investment of his time.
Both sides of the transaction get represented, and profs would compete for the best students, just as students compete for the best profs. That should create some real superstars and make those investments very worthwhile.
Yep. But what would be the incentive for the professors or schools to do this? Or the students? The professors get paid large sums of money right now to get a certain outcome that is immediately measurable, and which may not be tied to the students (when they're publishing papers).
The schools get large amounts of money for similar outcomes. What you're asking, is that they give up the easy life, and switch over to the uncertainty of investing in someone's future. Why would they do that? (unless the current system starts being less attractive for some of them)
If you were a prof at Staford, or Cal Tech, or MIT, or Harvard... etc. And you could get a piece (say .1%) of some of your students earnings over the next 10-20 years. What would YOU do for .1% of Eric Schmidt's income? Bill Gates? Larry Ellison? Etc?
Yes, this probably wouldn't work at John Doe University, but then it would of necessity have to be a collection of the best professors and best students. The currency would be IQ, dedication and will power.
How fitting to have such an amoral system for an MBA. Not a fair one either, but if you have to lose your morality, this is the way to go.
Don said...
How about just guarantee a spot for any US citizen, and do that for international students?
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