Cascades and Collegetown Housing
Collegetown housing causes widespread panic to Cornell students every year. Students rush to sign leases for apartments in early September, barely even a month after the school year has begun. This article discusses one renting company in particular who has all their future tenants sign a lease on the same day. The goal of this is to ensure fairness and a cohesive “first come, first serve” method. Each year, students line up outside of the leasing office, eager to get their dream apartment. This article interviews several students, including myself, about their experience camping outside the leasing office. Students arrived the night prior and stayed the night on the sidewalk. This scenario can be analyzed using information cascades.
Ithaca Renting Co offers apartments ranging from 1-6 bedrooms. The larger apartments are more competitive, as they are fewer in number. When analyzing this problem as an information cascade, the signal is the desired apartment size, and the choice is whether to get in line. Other groups can only see that one group has started lining up but do not know their desired apartment size. Once the first two groups got in line, around 7pm the previous night, the line started to grow. This is an example of a cascade because as the line grew longer, other groups knew the probability of them getting their apartment decreased, especially if they were looking at a high demand apartment size.
The information cascade is complex, as there are multiple apartment sizes instead of just two as we discussed in class. I have simplified the example to just having two apartment sizes, A and B and the choices for each group are get in line or don’t. Let’s assume there are less apartment A’s than apartment B’s.
The first person to get in line wants an apartment size of A so they will get in line first. The second person also wants apartment A. Since the second person can see that person 1 got in line, they know that there is a higher probability that this person also wants A. Next, the third person comes along and sees person 1 and 2 in line. Now, person 3 does not know which apartment they are looking for but knows that they should also get in line to guarantee a spot in apartment complex. As shown in this example, this is how the “get in line” cascade is created.
Source: https://cornellsun.com/2019/09/19/cornell-students-sleep-on-sidewalk-for-cheaper-more-desirable-leases/