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COURSE BIDDING AT BUSINESS SCHOOLS *
Author(s) -
Sönmez Tayfun,
Ünver M. Utku
Publication year - 2010
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2009.00572.x
Subject(s) - bidding , order (exchange) , microeconomics , market mechanism , yield (engineering) , mechanism (biology) , pareto principle , pareto optimal , economics , business , marketing , operations management , computer science , finance , set (abstract data type) , market economy , philosophy , materials science , epistemology , programming language , metallurgy
Mechanisms that rely on course bidding are widely used at business schools in order to allocate seats at oversubscribed courses. Bids play two key roles under these mechanisms: to infer student preferences and to determine who have bigger claims on course seats. We show that these two roles may easily conflict, and preferences induced from bids may significantly differ from the true preferences. Therefore, these mechanisms, which are promoted as market mechanisms, do not necessarily yield market outcomes. We introduce a Pareto‐dominant market mechanism that can be implemented by asking students for their preferences in addition to their bids over courses.