It can plausibly be argued that much of economic backwardness in the world can be explained by the lack of mutual confidence.
—Kenneth Arrow, winner of the Nobel Prize in Economics
AT THE UNIVERSITY OF CHICAGO’S BOOTH SCHOOL OF Business, where I teach, students don’t just register for classes—they bid for them. True to market principles, Chicago Booth organized this system to maximize student satisfaction. By creating a market in which students compete for the opportunity to take classes with the professors they like best, Chicago Booth ensures the class assignments that maximize students’ desires.
To function properly, this market, like all markets, requires not only official rules but social norms as well. ...