The College Tuition Pricing Game

I've been reading a book on game theory, and one of the sections dealt with college pricing schemes. The authors rightly, I believe, describe our tuition pricing as an inefficient Nash equilibrium. Nash (he of "A Beautiful Mind" fame) argued that there are equilibrium points in any game. An example of an inefficient equilibrium is our QWERTY keyboard layout. It was initially designed to slow down keystrokes so that typewriters wouldn't jam.

But that problem no longer pertains with modern computers, so why don't we switch to a more efficient layout? Basically, because we've "always" done it this way. It would take more time and effort to retrain the existing typers than you would gain in efficiency from the new layout, so barring some mandate from on high, no individual person has enough incentive to learn the new system.

Well, almost no one. With an inefficient system, there will always be about 2% of the population who are "innovators" willing to try the more efficient approach. But as long as 76% of the population is using QWERTY, the "slippery slope" will lead us to have 98% using the inefficient system.

So how does this apply to college tuition pricing? All of our institutions, as with cell phone companies and other organizations, focus on the list price (tuition, in our case) but not the true "all in" price (what college costs after you include room & board, fees, discount, quality of education, etc.). It takes too much money and effort to educate people out of their focus on the tuition bottom line for any one entity to switch to "all in" pricing that eliminates discounting and all of these other costs. You occasionally see a school try to move outside of the typical pricing models, but most fall back into the usual patterns fairly quickly.

The authors suggest, therefore, that even though this system is inefficient for all parties, it is unlikely to change, and we should just play this "bad" game as well as we can. Namely, we should all maximize our "hidden" costs and minimize our "up front" costs in order to maximize our revenue. So far, JBU hasn't gone completely in that direction, but it seems harder and hardre to resist the "fee-based" tuition model that the state schools have adopted or the "merit award" structures that the elite privates have used. We're clearly on that slippery slope as well.

Whither the Humanities?

As with most economic downturns, this one is causing enrollments in Humanities to decline which is raising once again the question of the long-term direction of liberal arts education. Most answers appear to be some form of "back to the future."

http://www.nytimes.com/2009/02/25/books/25human.html?_r=1

Three year degrees?

I've pondered the possibilities for a three-year degree on a number of occasions, but it's always seemed problematic in practice. That's apparently the conclusion of this piece as well, that three-year degrees sound efficient in theory but find few takers in practice.

http://www.insidehighered.com/news/2009/02/17/three

Three cheers for partisanship

As something of a partisan myself, I very much appreciated Jay Cost's counter-intuitive argument that partisanship is, perhaps, a healthy aspect of modern American democracy.

http://www.realclearpolitics.com/horseraceblog/2009/02/three_cheers_for_partisanship_1.html

Business schools and cheating

http://chronicle.com/daily/2009/02/11172n.htm?utm_source=at&utm_medium=en

Turns out that Business students are more likely to cheat than other students, in part because Business School cultures seem not to demonstrate as much concern about these issues as other academic cultures do.

Interestingly, I was just reading about prisoner dilemmas (where it’s in people’s individual interests to cheat, even though when all cheat, it hurts the group as a whole). These are also known as “tragedy of the commons.” After lots of study by game theorists, the “rules” to help restrain such cheating are five.

1) Make sure it’s clear who is “playing the game” (in this case, the students).
2) There must be clear rules about what is permissible and forbidden actions (not always easy in the digital age).
3) A system of penalties for violation of these rules must be clear and understood by all. These penalties should also be graduated (no “one strike and you’re out”) because there’s often a lot of room for “error” in any system.
4) A good system to detect cheating must be in place (if possible so that the group involved can help police itself automatically). Sometimes, this means that the rules on what is forbidden may need to be written more according to what can be detected.
5) Use the “users” to help create the rules, because while they all may have an incentive to cheat, they also all have an incentive to design a good system up front.

Private college sans residential life?

A sign of the economic times? Cut-rate private colleges at 1/3 the price. You get the small classes, full-time profs, face-to-face interaction, and bright students of a private college experience but without any of the residential component. I’ve often wondered what such a model might look like if, say, we wanted to run this type of program at our Roger’s site. This institution runs a prescribed set of Core courses during the morning, four days a week, for two years, and then the students transfer to the main campus for the rest of their time. We could certainly do something like that, even streaming chapel remotely. Kids this age apparently work mostly afternoon and evening jobs anyways (retail, restaurants, etc.). Sounds interesting to me.

http://www.boston.com/news/education/higher/articles/2009/02/03/cut_rate_campus/

The scholarship of administration

The author's basic point (that we need to make our administrative decisions based on more data-driven evidence) is undoubtedly correct. But I doubt that what he's suggesting will occur very often in practice for all sorts of logistical reasons.

http://www.insidehighered.com/views/2009/02/02/logue