Wednesday, December 7, 2011

More Tales From the Front: Duke Still Angry Students MAY Have Used Side Payments

This is almost too perfect. You can't get a better lesson in the basic problems of property rights and exchange than by looking at what the admins at Duke are doing. Do NOT try this at home, kids, because it is not the right way to do this.

This blog covered, in a previous post, the basics of the Duke House System, where groups were assigned space and then "allowed" to exchange. (Question: students are paying, and admins are paid out of that tuition money. Why when it comes to housing do the students work for the admins, rather than vice versa? If the students want to trade, and no one else is involved, why the firetruck do the admins get to veto it?)

Anyway, more kerfuffle about alleged (GASP!) payments. Excerpt:

After the housing lottery, some selective living groups were in the market for better housing.

InCube, JAM!, Chi Psi fraternity and Delta Sigma Phi fraternity have all engaged in successful section swaps. In the two weeks following the Oct. 25 housing lottery for next year, Housing, Dining and Residence Life allowed groups seeking a different section to exchange with another group as long as the trade was mutual, said Joe Gonzalez, associate dean for residence life. All of the exchanges had to be approved by HDRL.

After swapping with Jam!, InCube—assigned 1915 Yearby Ave. on Central Campus in the lottery—will instead retain its current section at 205 Alexander Ave. under the house model next Fall.

InCube was unhappy with its original housing assignment because it recently invested about $25,000 in its current common room on Alexander Avenue. JAM! was assigned this location in the October lottery, so InCube entered trading negotiations with them immediately after the housing lottery.

“There were no problems at all,” said JAM! President Elizabeth Clark, a junior. “Everyone at InCube was hoping that we’d switch with [JAM!], and when I brought the idea back to JAM!, everyone was really enthusiastic about it.”

HDRL approved the second housing trade with similar success.

After the lottery, Chi Psi fraternity approached Delta Sigma Phi fraternity and showed an interest in trading sections, said Delta Sigma Phi President Zach Sperling, a junior. Delta Sigma Phi was originally assigned to Edens Quadrangle 3B, and Chi Psi was assigned to Craven Quadrangle B.

“While [Edens] is a great place to live, it is somewhat removed from the rest of campus,” Sperling wrote in an email Thursday. “We were quite pleased with where [Chi Psi] section was. It was a mutually beneficial trade.”

Chi Psi President Matt Straus, a senior, declined to comment.

“Overall, [trading] was a smooth process,” Sperling said. “[Gonzalez and Donna Lisker, associate dean of undergraduate education and co-chair of the House Model committee,] were very accommodating and put a lot of time into making sure trades went smoothly after housing was chosen”.

The swapping process was not without controversy, however, as rumors of groups offering bribes for a new section circulated.

"Bribes?" Payments are only bribes if they are illegal. Payments should only be illegal if there is some abuse of power. If a student group paid an admin for a better housing draw, THAT would be a bribe. No one has alleged anything like that. Instead, what is being whispered is that some euvoluntary exchanges may have taken place.

How can a payment from a group that really values a space, to a group that doesn't value the space much, count as a bribe? That would be "compensation," for those of you keeping score at home.

Look at the property rights problem here: Duke has turned the dorm space into a common pool resource. No one has incentives to improve the space, because if they improve it they may not get the same draw next year. And the improved value of the space would make the lucky group that DOES get the space want to hold onto it.

If you are going to randomize ownership rights, returning us to a Hobbesian anarchy, at least you should allow side payments so groups have some hope of trading to get their space back. If you spend $25,000 improving the property, you would like to have use of the property. Conversely, if you can't get secure rights to the property, you won't invest in it. Not because you don't want to, but because it will be stolen by lawless lottery bandits.

The "no bribes" (sic) policy is not just dumb. It's dumb on big tall clown stilts, with a red rubber ball nose.


  1. You're onto something with the language choices. Perhaps a group that wants to sell its choice spot to another group should just call the payment "reparations". Then it would be OK.

  2. This is very disappointing, especially from an institution as renowned as Duke University. Have any of the economists at school tried to persuade the Duke housing office? Sounds like the Duke housing office should take some intro-level economics. This is a terrible, and unproductive, way to ration the good of housing!!


Do you have suggestions on where we could find more examples of this phenomenon?