The UVA Housing Dilemma

          As most first year students can attest, the off-grounds housing situation at the University of Virginia is extremely stressful. Within the first month of school, there is already a frenzy surrounding the housing situation for the following year. As a first year, this is most likely well before you have even met the people you will truly be friends with the next year. Making a decision about your life 12 months in advanced is a daunting task for anyone. Year after year students complain. So why hasn’t the situation changed?

It may be due to the fact that this situation contains the defining characteristic of a Prisoner’s Dilemma. All student’s in the UVA community have a dominant-strategy to sign their lease earlier than all of the rest, to make sure they secure their optimal apartment complex, while everyone would be better off if we pushed the “frenzy” back to spring semester. As most leases commence in July, signing in the spring is still early. Singing in the spring would give student’s more time to figure out their friend and financial situation, give them more opportunities to research apartment complexes before signing a lease, and have a smoother adjustment for their first semester of the school year. However, if only a few students decide to wait for spring semester to come around, they will have significantly less choices and will be much worse off than if they had just decided to sign in October. If everyone waits until spring semester except for one student, that student has all options available to them and no competition for apartment complexes, they are also much better off signing in October.  

 For this example, we are going to assume that the prices of the apartments are constant throughout the year, that the benefits of signing later apply to all students equally, and that only UVA students are participating in this apartment renting situation. In the situation given, the matrix below represents the dilemma along with numbers representing utility (Student A/Other UVA Students). Student A’s optimal choice is to rent in October regardless of what the other UVA Student’s choose. The same is true for Other UVA Students. In this situation, all players signing in October is the dominant-strategy equilibrium, but it is also a Pareto inefficient equilibrium. At least one, in fact all other participants can be made better off without making another player worse off.

Student A --> Other UVA Students	Wait until 2nd Semester	Sign Lease in October
Wait until 2nd Semester	(10, 10)	(12, 3)
Sign Lease in October	(3, 12)	(7, 7)

 Perhaps we should all decide to hire a thug to break the leg of every student who tries to rent an apartment before the spring semester in order to push us away from this Pareto inefficient equilibrium.