Room Assignment A Market Approach Hassaan Khan and Sam Yellen Dec. 4, 2007
Room Assignment - The Status Quo • Housing is a very stressful experience for undergraduates • Residential Colleges divided into Suites which are comprised of rooms
Reasons for Stress • Scarcity of Desirable suites • Individual Preferences • Partners • Rooms • Heterogeneous distribution • Stickiness
Existing System • Form teams to enter “room draw” • Teams advised by rooming committee about availability • Each team draws a number • Teams choose suites, largest to smallest according to lottery number • Unsuccessful team broken up and redraw for a smaller room.
Why a Market Solution? • Information asymmetry • Among groups • Within groups • Regulatory – (between housing committee and student body) • Temporal Rigidity • If groups are awarded in a set order, certain behaviors are incentivized.
Markets Aggregate Preferences • Information asymmetry • Price can signal preference • For a individual choosing a group • For groups choosing rooms • Temporal Rigidity • Bids can be entered and modified simultaneously • Students can immediately bid on the rooms they find most desirable.
Market Design • Each Student assigned 100 points. • Scarcity of points forces bids to reflect preferences • Two ways to bid • On individual room in a suite • Join a team and bid for a suite collectively • Bidders can diversify the spending of their points, so that if they do not win a certain room they still have a chance to win a different room. • Soft Ending – Auction closes a set amount of time after last bid.
Experimental Design • 2 runs, 2 treatments each • Each player assigned affinities for other players • Status Quo vs. Market-Based • Participants asked to team up with other players to maximize utility, the sum of affinities
Results • Market and Status Quo outcomes Identical
Conclusions • Market Based Approach at least as efficient as status quo in allocating rooms. Other Observation: • Increased Utility of Larger rooms • Larger groups can have more friends • No additional preference for singles or smaller rooms
Problems • Biased Group – groups sought to replicate success in previous round • Order of treatments not reversed • Suites were homogenous other than size • Group too small • Stickiness proportional to the number of possible groups • In class, approximately 15 students taken 3 at a time = 455 possible combinations • 200 students in groups of 5 – 2535650040 possible groups • 7 orders of magnitude difference!
What do to next • Redo Experiment • Same set of utilities but assigned to different students in each treatment • Increase Complexity • Use a larger group of students • Increase heterogeneity of rooms using floor maps • Use homegrown affinities by letting groups of friends test the system. • Utility will be measured by using a questionnaire • Convince Pierson College to Accept Our System