Why isn't prestige taken into account?

About 20 years ago, there was a lawsuit involving admissions practices at Boalt Hall (the Berkeley law school). Boalt was forced to disclose the way that it handled undergraduate GPAs from different schools. Basically GPAs from some schools were adjusted upward, while GPAs from other schools were left unchanged or even adjusted downward.

The numbers were never intended to be public, but they became available as a result of the lawsuit. http://articles.latimes.com/1997/jul/16/local/me-13288

You can see that in general, more selective and prestigious schools were more likely to get an upward GPA boost. The maximum weights were given to GPAs from certain top LACs (e.g. Swarthmore, Williams, Carleton). Some top private universities (e.g. JHU, Dartmouth, Princeton) had very high weights as well. Boalt did not give an upward adjustment to GPAs from Berkeley or other UC schools.

Don’t know if grad schools still do this. If they do, they probably protect their documentation in such a way that it won’t be introduced as evidence in a lawsuit.