Changing the Course Allocation Mechanism at Wharton

This paper reports on an experiment conducted at the Wharton School of the University of Pennsylvania, testing a new mechanism for matching students to schedules of courses. The experiment compared Budish’s (2011) approximate competitive equilibrium from equal incomes (CEEI) to the incumbent, a fake-money auction used by Wharton and numerous other professional schools. CEEI outperformed the auction on quantitative measures of efficiency and fairness and qualitative measures of perceived strategic simplicity and student satisfaction. The experiment succeeded in the Roth (1986) sense of “whispering in the ears of princes”, persuading the Wharton administration to adopt CEEI and guiding real-world implementation. Keywords: Market Design, Experiments, Matching, Assignment, Combinatorial Allocation Problems JEL Codes: D47 (Market Design), C9 (Experiments), C78 (Matching Theory) * The authors thank Gerard Cachon, without whom this study would never have been possible, and The Wharton School, in particular the Course Allocation Redesign Team and Wharton Computing. We thank Adriaan Ten Kate and Xan Vongsathorn for excellent RA work. We also thank Clayton Featherstone, Emir Kamenica, Stephen Leider, Paul Milgrom, Muriel Niederle, Jesse Shapiro, and Alvin Roth, as well as seminar participants at Boston University, the Stony Brook Workshop on Experimental Game Theory, ESA Santa Cruz, University of Michigan, Stanford, Wharton, and NBER Market Design. Disclosure: The CEEI mechanism is in the public domain. The software implementation of the CEEI mechanism was funded by and is owned by Wharton, which has branded the mechanism as “Course Match.” If Wharton licenses the Course Match software to other institutions and revenues exceed a threshold, then a royalty will accrue to a market design research lab that will be overseen by Eric Budish. Wharton had no right of prior review of the results of the present study. † Budish: Booth School of Business, University of Chicago, [email protected] ‡ Kessler: The Wharton School, University of Pennsylvania, [email protected]