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Voluntary disclosure and the strategic behavior of colleges

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  • Conlin, Michael
  • Dickert-Conlin, Stacy
  • Chapman, Gabrielle
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    Abstract

    This paper investigates how outside ranking organizations such as U.S. News and World Report affect colleges’ admission decisions. To do this, we focus on a policy that has received criticism for being motivated by ranking concerns: optional reporting of SAT I scores. This policy allows colleges to report an average SAT I score based on those applicants who chose to submit their scores which may not be reflective of actual student body quality. We use proprietary data from two liberal arts colleges to address how the optional reporting policy affects the colleges’ admission decisions as well as how applicants’ SAT I scores influence their decision to submit these scores to the colleges. The data suggest that college admission departments are behaving strategically by rewarding applicants who do submit their SAT I scores when their scores will raise the college's average SAT I score reported to U.S. News and World Report and rewarding applicants who do not submit when their SAT I scores will lower the college's reported score. The data also suggest that applicants are behaving strategically by choosing not to reveal their SAT I scores if they are below a value one might predict based on their other observable characteristics.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

    Volume (Year): 96 (2013)
    Issue (Month): C ()
    Pages: 48-64

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    Handle: RePEc:eee:jeborg:v:96:y:2013:i:c:p:48-64

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    Web page: http://www.elsevier.com/locate/jebo

    Related research

    Keywords: Voluntary disclosure; SAT optional policy; Rankings;

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    1. Sanford Grossman & Oliver Hart, . "Disclosure Laws and Takeover Bids," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 23-79, Wharton School Rodney L. White Center for Financial Research.
    2. Ginger Zhe Jin & Phillip Leslie, 2003. "The Effect Of Information On Product Quality: Evidence From Restaurant Hygiene Grade Cards," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(2), pages 409-451, May.
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    4. Webster, Thomas J., 2001. "A principal component analysis of the U.S. News & World Report tier rankings of colleges and universities," Economics of Education Review, Elsevier, Elsevier, vol. 20(3), pages 235-244, June.
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    6. Robinson, Michael & Monks, James, 2005. "Making SAT scores optional in selective college admissions: a case study," Economics of Education Review, Elsevier, Elsevier, vol. 24(4), pages 393-405, August.
    7. Muriel Niederle & Lise Vesterlund, 2005. "Do Women Shy Away From Competition? Do Men Compete Too Much?," NBER Working Papers 11474, National Bureau of Economic Research, Inc.
    8. Michael Luca & Jonathan Smith, 2011. "Salience in Quality Disclosure: Evidence from the U.S. News College Rankings," Harvard Business School Working Papers 12-014, Harvard Business School.
    9. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 24(3), pages 461-83, December.
    10. Mathios, Alan D, 2000. "The Impact of Mandatory Disclosure Laws on Product Choices: An Analysis of the Salad Dressing Market," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 43(2), pages 651-77, October.
    11. Paul R. Milgrom, 1979. "Good Nevs and Bad News: Representation Theorems and Applications," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 407R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    12. William J. Collins & Robert A. Margo, 1999. "Race and Home Ownership, 1900 to 1990," NBER Working Papers 7277, National Bureau of Economic Research, Inc.
    13. Griffith, Amanda & Rask, Kevin, 2007. "The influence of the US News and World Report collegiate rankings on the matriculation decision of high-ability students: 1995-2004," Economics of Education Review, Elsevier, Elsevier, vol. 26(2), pages 244-255, April.
    14. Rothstein, J.M.Jesse M., 2004. "College performance predictions and the SAT," Journal of Econometrics, Elsevier, Elsevier, vol. 121(1-2), pages 297-317.
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