A.) For this week's reading assignment, I chose to read the blog by Mike Munger regarding the room draw for undergraduate students at Duke University. What I don't understand is why it is wrong to introduce money to a transaction. Based on what the Head of Residential Life was saying, paying someone for a house is not only against the rules, it's also immoral and the parties involved are heavily punished. But the trade was fine at first until money was added to the exchange. The money doesn't really add an extra dimension; both groups are still happy with the exchange and receive more value from their new houses. Maybe the Duke administrators are pissed off at the fact that an exchange is happening that doesn't result in a sum of money received by the university. It's not like illegal substances or houses are being exchanged. So what could possibly be the problem. Maybe this is just a result of a lottery trying to ration goods instead of prices. But according to Duke, the price system is immoral under these circumstances, so I guess it's almost impossible for people to benefit from the room draw.
B.) What is immoral about paying for another house?
If the price was significantly lower, would the university's response be any different?
Why was the lottery used in the first place?
C.) This reading was assigned to demonstrate the effects of a rationing mechanism other than the price system. It also brings to light the problems with America today: a failure to understand simple economics leads to unnecessary problems.
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