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Strategic Disclosure: The Case of Business School Rankings

  • Michael Luca

    ()

    (Harvard Business School, Negotiation, Organizations & Markets Unit)

  • Jonathan Smith

    ()

    (The College Board -Advocacy & Policy Center)

Registered author(s):

    We empirically analyze disclosure decisions made by 240 MBA programs about which rankings to display on their websites. We present three main findings. First, consistent with theories of countersignaling, top schools are least likely to disclose their rankings, whereas mid-ranked schools are most likely to disclose. Second, schools that do poorly in the U.S. News rankings are more likely to disclose their Princeton Review certification, suggesting that schools treat different certifications as substitutes. Third, conditional on displaying a ranking, the majority of schools coarsen information to make it seem more favorable. The stark patterns in the data help to provide empirical evidence on the strategic elements of voluntary disclosure and marketing decisions.

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    Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 14-010.

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    Length: 25 pages
    Date of creation: Jul 2013
    Date of revision: Nov 2014
    Handle: RePEc:hbs:wpaper:14-010
    Contact details of provider: Postal: Soldiers Field, Boston, Massachusetts 02163
    Phone: 617.495.6000
    Web page: http://www.hbs.edu/

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    1. David Dranove & Ginger Zhe Jin, 2010. "Quality Disclosure and Certification: Theory and Practice," NBER Working Papers 15644, National Bureau of Economic Research, Inc.
    2. Paul R. Milgrom, 1979. "Good Nevs and Bad News: Representation Theorems and Applications," Discussion Papers 407R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    3. Amy Finkelstein, 2009. "E-ZTAX: Tax Salience and Tax Rates," The Quarterly Journal of Economics, MIT Press, vol. 124(3), pages 969-1010, August.
    4. Michael Luca & Jonathan Smith, 2013. "Salience in Quality Disclosure: Evidence from the U.S. News College Rankings," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(1), pages 58-77, 03.
    5. Nick Feltovich & Richmond Harbaugh & Ted To, 2002. "Too Cool for School? Signalling and Countersignalling," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 630-649, Winter.
    6. Boyan Jovanovic, 1982. "Truthful Disclosure of Information," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 36-44, Spring.
    7. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-83, December.
    8. Jin, Ginger Zhe & Sorensen, Alan T., 2006. "Information and consumer choice: The value of publicized health plan ratings," Journal of Health Economics, Elsevier, vol. 25(2), pages 248-275, March.
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