Wharton builds a better mousetrap

It’s the perfect course. It’s taught by the perfect faculty member. You’ve got to have it.

But it’s got 12 seats in it, and 160 other MBA students would kill -- or sell their 401(k) --to get in.

Hey. The situation is no worse than the competition to register for any popular course.

But Wharton has developed what may be a better way.

Which doesn’t mean you’ll necessarily get in. After all, it’s 12 seats and one perfect prof and 160 competitors.

“As long as we can’t clone these faculty, we will need a rational process to determine who gets in and who does not,” said Anjani Jain, associate adjunct professor in the operations and information management department and deputy vice dean and director of the MBA program.

So those committed capitalists at Wharton, led by a faculty committee chaired by Jain, found their idea of the ultimate fair system in a sort of stock market for course registration -- a 10-round, silent-bid auction. The goal is to replace the random assignment to popular courses with a system that reflects students’ deliberate choices, expressed in bids.

“It’s classic for a business school,” said Heather Cochran (WG’00). “It’s a market economy, the holy grail of capitalism.”

Jain’s committee checked other MBA programs’ registration systems before they designed their own.

“I think Wharton’s system is great compared to [the University of] Chicago’s,” said Margaret Belknap, an engineering doctoral candidate who spent 48 intense hours exploring use of the auction as a basis for her dissertation. In Chicago’s, students bid on schedules, and once the semester begins, there’s no opportunity to make a change.

The Wharton auction gives students 5,000 start-up points to place silent bids on individual courses. They get 10 rounds to bid, and can sell in all but the first round. By the final round, they must have no time conflicts, which will cost them points -- and in some cases a W on the transcript. Ouch. So greed can be painful.

Unspent points carry over from one semester to the next, and each successfully completed course earns the students 1,000 more points.

The beauty of the system is that it allows students to plan long term and to put their points in the courses they want most. “It really forces you to prioritize,” Cochran said.

The average price per course is only 423 points in the first round, said Jane Thompson, senior associate director in the Academic Services Office of the Wharton Graduate Division. In the middle rounds, things peak to around 1,000 points, and at the end drop to about 170 points.

“There’s a lot of arbitrage that goes on,” said Cochran. “I don’t care that I’m not good at it.”

But some of her fellow students do care.

“Some of these courses go for 3,000 or 4,000 points, and you’re only given 5,000, so you have to play the market in order to get your courses,” said one unhappy trader, David Garland (WG’00), who still hasn’t gotten the one course he really wants. He said he’ll be too short of points to get it in his final semester.

But the wild accumulation of points of the early auctions has been curbed. “There’s been a number of loopholes that students used to arbitrage the system which they’ve systematically closed,” said Adrian Norman (WG’00).

For all their complaints, the students we polled said the system was better than the more traditional approach to course registration. “It’s not entirely pleasant, but it’s fair,” Cochran said.

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Originally published on October 14, 1999