38 Pages Posted: 1 Jan 2008 Last revised: 16 Oct 2008
Date Written: December 30, 2007
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.
Keywords: Course Allocation, Matching, Market Design, Deferred Acceptance
JEL Classification: C71, C78, D71, D78
Suggested Citation: Suggested Citation