University Ranking Publications: to Manipulate or Not to Manipulate

42 Pages Posted: 5 Aug 2016

See all articles by James A. Dearden

James A. Dearden

Lehigh University

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Gary L. Lilien

Pennsylvania State University - Institute for the Study of Business Markets

Date Written: August 2, 2016

Abstract

We develop a multi-period theoretical model to characterize the relationship between a publication that ranks universities and prospective attendees -- high school students -- who might view the ranking and use it to help decide which university to attend. We assert that published rankings not only offer information about the objective quality of universities, but also have an effect on the prestige of universities, which is an element in students' utility functions beyond objective quality elements. We show that a prestige effect can incent publications to take actions that are not in the best interest of the students; an example would be the excessive changes to ranking methodology that U.S. News & World Report (USNWR) is usually accused of. We show that if a ranking that uses an attribute-and-aggregate ranking methodology (the ranking methodology publications like USNWR and BusinessWeek use) creates prestige, then the publication (a) optimally chooses attribute score weights that do not match student preferences and (b) changes these attribute score weights over time even if there are no changes in student preferences. If a prestige effect is not present, then, according to our model, the publication optimally chooses attribute score weights that match student preferences. We use our model to characterize a socially-optimal ranking methodology -- one that maximizes the sum of the publisher's profit, the utilities of students who view the ranking, and the utilities of the students who do not view the ranking -- and show that the socially-optimal ranking methodology evolves over time toward a stable ranking that diverges from the publisher's optimal ranking. We conclude by discussing how students should deal with published rankings in the current environment, and what types of ranking methodologies might be developed to better represent student preferences.

Keywords: University rankings, strategic information transmission

JEL Classification: D82, D83

Suggested Citation

Dearden, James A. and Grewal, Rajdeep and Lilien, Gary L., University Ranking Publications: to Manipulate or Not to Manipulate (August 2, 2016). Available at SSRN: https://ssrn.com/abstract=2818037 or http://dx.doi.org/10.2139/ssrn.2818037

James A. Dearden (Contact Author)

Lehigh University ( email )

621 Taylor Street
Department of Economics
Bethlehem, PA 18015
United States

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Gary L. Lilien

Pennsylvania State University - Institute for the Study of Business Markets ( email )

University Park, PA 16802-3306
United States
814-863-2782 (Phone)
814-863-0413 (Fax)

HOME PAGE: http://www.smeal.psu.edu/isbm/about/people/LILIEN.

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