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• Article | Journal of Economics & Management Strategy | Spring 2013

  Salience in Quality Disclosure: Evidence from the U.S. News College Rankings

  Michael Luca and Jonathan Smith

  How do rankings affect demand? This paper investigates the impact of college rankings, and the visibility of those rankings, on students' application decisions. Using natural experiments from U.S. News and World Report College Rankings, we present two main findings. First, we identify a causal impact of rankings on application decisions. When explicit rankings of colleges are published in U.S. News, a one-rank improvement leads to a 1-percentage-point increase in the number of applications to that college. Second, we show that the response to the information represented in rankings depends on the way in which that information is presented. Rankings have no effect on application decisions when colleges are listed alphabetically, even when readers are provided data on college quality and the methodology used to calculate rankings. This finding provides evidence that the salience of information is a central determinant of a firm's demand function, even for purchases as large as college attendance.

  Keywords: Rank and Position; Demand and Consumers; Quality; Decisions; Newspapers; United States;

  Citation:

  Luca, Michael, and Jonathan Smith. "Salience in Quality Disclosure: Evidence from the U.S. News College Rankings." Journal of Economics & Management Strategy 22, no. 1 (Spring 2013): 58–77.

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• Teaching Note | HBS Case Collection | 2013 (Revised from original 2012 version)

  Innovating into Active ETFs: Factor Funds Capital Management LLC (TN)

  Lauren Cohen, Kenneth Froot and Timothy Gray

  Citation:

  Cohen, Lauren, Kenneth Froot, and Timothy Gray. "Innovating into Active ETFs: Factor Funds Capital Management LLC (TN)." Harvard Business School Teaching Note 212-085, February 2013. (Revised from original May 2012 version.)

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• Supplement | HBS Case Collection | 2012 (Revised from original 2005 version)

  UAL 2004: Pulling Out of Bankruptcy (CW)

  Daniel Baird Bergstresser, Kenneth A. Froot and Darren Robert Smart

  UAL is a large air transportation company with roots that go back to the 1920s. As a legacy carrier, going back to before the 1978 deregulation of air transportation markets, United Airlines is burdened with cost structures that make it difficult to compete with newer competitors. In addition, UAL has the burden of $7.6 billion in unfunded pension obligations and $2 billion in unfunded retiree health obligations. In June 2004, UAL is still operating under Chapter 11 bankruptcy protection, which began December 2002. It has needed extensions of the exclusivity period from the bankruptcy court. UAL's plan of reorganization is predicated on receiving $1.8 billion in loan guarantees from the Air Transport Stabilization Board (ATSB). But its request for loan guarantees from the ATSB was recently rejected. The company must decide what to do next and how to emerge from bankruptcy.

  Keywords: bankruptcy; compensation; costs; loans; reorganization; Air Transportation; Insolvency and Bankruptcy; Restructuring; Financing and Loans; Compensation and Benefits; Air Transportation Industry; United States;

  Citation:

  Bergstresser, Daniel Baird, Kenneth A. Froot, and Darren Robert Smart. "UAL 2004: Pulling Out of Bankruptcy (CW)." Harvard Business School Spreadsheet Supplement 205-709, November 2012. (Revised from original February 2005 version.)

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