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Enrollment management under deep uncertainty: an entropy-driven Bayesian decision architecture for UK higher education: preprint

Research output: Other contribution

Abstract

UK universities face compounded enrollment uncertainty from demographic plateau, volatile international postgraduate taught demand, and a frozen domestic fee cap, while capital commitments and programme restructuring are largely irreversible within a planning horizon. We introduce an entropy-driven Bayesian Decision Theory (BDT) architecture, formalised as a partially observable Markov decision process (POMDP), for annual enrollment-driven financial management in Research Intensive higher education institutions (HEIs). The architecture uses the Shannon entropy of the posterior demand-regime belief as an automatic caution regulator: under high regime uncertainty the system hedges toward prior expectations and favours reversible strategic postures; as Higher Education Statistics Agency (HESA) evidence accumulates and entropy collapses, it progressively commits to the posterior-optimal strategy. A satisficing gate imposes a hard viability constraint that prevents catastrophic over-commitment when Low-regime probability is elevated, and an option-value mechanism penalises irreversible decisions before regime identity has been established. Empirical calibration uses HESA student and finance data from four Russell Group universities (Warwick, Exeter, Leeds, Bristol) over 2014/15--2024/25. Monte Carlo simulation ($n = 500$) shows that the architecture achieves risk-adjusted Pareto dominance over five comparators: statistically equivalent expected reward to the best comparator strategy (mean 349.2 vs.\ 360.7, $p = 0.986$) with 0.9 percentage points lower distress probability---approximately 4--5 fewer financial-crisis paths per 500 simulations. Entropy collapse following Bayesian belief updating alone explains 17--30\,\% of the reward premium over non-belief strategies. The architecture produces zero distress across all five initial belief scenarios tested, including a pessimistic 50\,\% prior on the Low regime. The calibration pipeline uses only HESA and Office for National Statistics (ONS) open data and is designed for annual redeployment.

Original languageEnglish
PublisherSSRN
DOIs
Publication statusPublished - 22 May 2026

Keywords

  • preprint

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