Friday, September 30, 2016

Transfer Pricing with "Illinibucks"

In order to fully determine what Illinibucks (bucks) are and how they work, we must first answer some questions.  Is every student given the same amount of bucks?  Are students given the opportunity to purchase more bucks?  Can students transfer or trade their bucks?  What happens if multiple students use their bucks to move to the head of the same line?
These are difficult questions to ask since the Illinibuck system seems vague and almost counterintuitive.  How would the University deal with multiple students using their bucks to get ahead in the same line?
I will imagine a scenario to illustrate how Illinibucks might work.  In this scenario, I would set up Illinibucks so that every student is given an equal amount to use each semester.  If a student has leftover bucks at the end of the semester, those will roll over to the next semester.  Students would not be able to purchase more bucks in a given semester because it would give wealthy students an advantage over other students.  Transferring bucks to another student is also not allowed because it would encourage an informal buying and selling market (which would also give advantage to students with more money).
Students would be able to use their bucks to purchase “spots in line” for housing sign-up, course registration, and appointments with academic advisors.  They could also use their bucks to move to the front of long lines in the dining halls, bookstore, and to get into shows/concerts that may be happening on campus.  Having many options from which students can choose to spend their bucks helps minimize the problem of too many students going to the front of the same lines.  Even so, students who choose to go to the front of the same lines would have two options.  The first option would be to move to a special “fast” line consisting of all the students who have used their Illinibucks to get to the front of a line.  The second option would be to bid for spots ahead of the fast line.  Students could allocate more bucks to get higher up in the line than those who already paid.  The first student in line would be the one who bid the most.  This allows students some extra degree of choice in deciding how to allocate their bucks and also solves the problem of who will be first in line.
If the prices are too low, almost everyone will choose to be in the fast lines.  This would then encourage more bidding because the fast line will not give students much of an advantage.  If the prices are too high, then there will be less bidding and each fast line will be shorter.  The prices would have to be set in a way that gave the fast line students an advantage but still encouraged some bidding.
In this scenario, I would be likely to spend most of my bucks on choosing classes.  Since I am at the University primarily to take classes toward my degree, getting a spot in the best ones is very important.  I imagine that many other students would feel the same way, so the price of early course registration would likely be much higher than the price of cutting the line for the bookstore or getting an appointment with an academic advisor.
I question how this system would work alongside other systems that the University has in place for allocating “spots in lines.”  For example, honors students get to register for classes earlier than other students, and seniors get to register before freshmen, etc.  I think it might work best if honors students had separate lines for other honors students and bid for higher spots within the honors line.  
Overall, the Illinibuck system could work with a lot of planning and a trial period, but I think our current system is better.  It seems cumbersome and somewhat arbitrary to have students pay for spots in line using Illinibucks that are given to all students.


  1. It might help in your discussion if you focused on categories of classes that you'd like to get into that you currently have trouble doing so. For example, are they courses in your major? or your minor? or filling some gen ed requirement? Or is it something else, like you need a pre-requisite that you con't currently have and that course is hard to get into. The supply issue for each of these may be different.

    If supply is perfectly inelastic, then as you suggested all Illinibucks could possible do is to reallocate the supply from some students to other students by changing the priority of who has early access.

    The issue I hope for us to talk about in class, and I encourage you to think of it here some, is that when there is excess demand do the people who are determining supply know the extent of the excess demand? If they did know this would it impact their supply decisions?

    In the particular case that is of concern to you, getting into some classes, if there are many people who are in the same situation as you, might there be some way to expand course capacity so some of these students could be accommodated?

  2. I think the fairest way the “illinibucks” system works is by distributing equal amount of “illinibucks” to all students at the beginning of the semester for free, and leftover bucks could not be rolled over to the next semester. The “first come first serve” rule could still be applied when multiple students use their bucks to get ahead in the same line. The first option you mentioned would be more practical, and I think making bids will make it very difficult to manage.

  3. In my post, I brought up many of the same points that you did. Particularly, I considered having a market for Illinibucks that included trading between others. I do challenge the notion of unfairness for richer students that you question. The idea of advantage for richer people is implied in the scenario, regardless of whether players can trade illinibucks amongst each other or not. I do agree that the Illinibuck system would be cumbersome, and even counterintuitive.