An On-Campus Application of the Efficient Market Hypothesis

Last week, as I walked through campus on the way to meet with my professor in the Rich Building, I passed Asbury Circle and saw several different booths and tables. It was Homecoming week, and several student organizations were showcasing their school spirit and rallying up the troops for a celebration of our university’s rich history. While I enjoyed the electric nature of the festivities, I needed to pick the correct allocation of booths and tables to visit in order to maximize my utility given the constraint of my upcoming meeting with my professor. I realized that I was faced with a real-world optimization problem.

Given that I had applied a concept taught to me in one of my economics courses to identify the problem, I figured that another economic concept might help me arrive at a solution. Which one? None other than the efficient market hypothesis.

I quickly scanned Asbury Circle and noticed a few trends across the stations. There were tables handing out informational fliers, some showcasing arts & crafts, and others handing out food. At the time, I was not very interested in the arts & crafts or fliers, so I focused on the food options. They seemed to fall into two categories: food that I was interested in eating and snacks that did not look as appetizing. For the more promising options, the lines were quite long, while for the less appealing choices, the lines were much more manageable. 

While I may have enjoyed the snacks from one of the longer lines, the marginal benefit of the food would not have exceeded the marginal cost of waiting. By that same token, although the marginal cost of getting a snack from the shorter line would have been low, the marginal benefit of receiving an unappealing snack would not have made it worth it. 

Edited by David Casazza and Matthew Takavarasha