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Asymmetry by Design? Identity Obfuscation, Reputational Pressure, and Consumer Predation in U.S. For-Profit Higher Education. Research & Occasional Paper Series: CSHE.5.2020

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Title: Asymmetry by Design? Identity Obfuscation, Reputational Pressure, and Consumer Predation in U.S. For-Profit Higher Education. Research & Occasional Paper Series: CSHE.5.2020
Language: English
Authors: Goldstein, Adam, Eaton, Charlie, University of California, Berkeley. Center for Studies in Higher Education
Source: Center for Studies in Higher Education. 2020.
Availability: Center for Studies in Higher Education. University of California, Berkeley, 771 Evans Hall #4650, Berkeley, CA 94720-4650. Tel: 510-642-5040; Fax: 510-643-6845; e-mail: cshe@berkeley.edu; Web site: http://cshe.berkeley.edu/
Peer Reviewed: N
Page Count: 44
Publication Date: 2020
Sponsoring Agency: Overdeck Family Foundation
Document Type: Reports - Research
Education Level: Higher Education
Postsecondary Education
Descriptors: Consumer Economics, Merchandise Information, Deception, Reputation, Colleges, Proprietary Schools, Marketing, Student Recruitment, Costs, Graduation Rate, Outcomes of Education, Wages, Loan Repayment, Student Loan Programs, Law Enforcement
Abstract: This article develops and tests an identity-based account of malfeasance in consumer markets. It is hypothesized that multi-brand organizational structures help predatory firms short-circuit reputational discipline by rendering their underlying identities opaque to consumer audiences. The analysis utilizes comprehensive administrative data on all for-profit U.S. colleges, an industry characterized by widespread fraud and poor (though variable) educational outcomes. Consistent with the hypothesis that brand differentiation facilitates malfeasance by reducing ex ante reputational risks, colleges which are part of multi-brand companies invest less in instruction, have worse student outcomes, and are more likely to face legal and regulatory sanctions (relative to single-brand firms). Maintaining multiple outward-facing brand identities also mitigates reputational penalties in the wake of law enforcement actions, as measured by news coverage of the legal action, and by subsequent enrollment growth. The results suggest that identity multiplicity plays a key role in allowing firms to persist in furnishing sub-standard products, even amid frequent scandals and media scrutiny. Predatory practices are facilitated not only from the inherent informational asymmetries in a given product, but also from firms' efforts to make themselves less legible to audiences. The analysis contributes to research on higher education, organizational theory, and the sociology of markets. [Additional funding for this research was provided by the University of California.]
Abstractor: As Provided
Entry Date: 2020
Accession Number: ED606655
Database: ERIC
FullText Text:
  Availability: 0
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  Data: Asymmetry by Design? Identity Obfuscation, Reputational Pressure, and Consumer Predation in U.S. For-Profit Higher Education. Research & Occasional Paper Series: CSHE.5.2020
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  Data: Center for Studies in Higher Education. University of California, Berkeley, 771 Evans Hall #4650, Berkeley, CA 94720-4650. Tel: 510-642-5040; Fax: 510-643-6845; e-mail: cshe@berkeley.edu; Web site: http://cshe.berkeley.edu/
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  Data: <searchLink fieldCode="DE" term="%22Consumer+Economics%22">Consumer Economics</searchLink><br /><searchLink fieldCode="DE" term="%22Merchandise+Information%22">Merchandise Information</searchLink><br /><searchLink fieldCode="DE" term="%22Deception%22">Deception</searchLink><br /><searchLink fieldCode="DE" term="%22Reputation%22">Reputation</searchLink><br /><searchLink fieldCode="DE" term="%22Colleges%22">Colleges</searchLink><br /><searchLink fieldCode="DE" term="%22Proprietary+Schools%22">Proprietary Schools</searchLink><br /><searchLink fieldCode="DE" term="%22Marketing%22">Marketing</searchLink><br /><searchLink fieldCode="DE" term="%22Student+Recruitment%22">Student Recruitment</searchLink><br /><searchLink fieldCode="DE" term="%22Costs%22">Costs</searchLink><br /><searchLink fieldCode="DE" term="%22Graduation+Rate%22">Graduation Rate</searchLink><br /><searchLink fieldCode="DE" term="%22Outcomes+of+Education%22">Outcomes of Education</searchLink><br /><searchLink fieldCode="DE" term="%22Wages%22">Wages</searchLink><br /><searchLink fieldCode="DE" term="%22Loan+Repayment%22">Loan Repayment</searchLink><br /><searchLink fieldCode="DE" term="%22Student+Loan+Programs%22">Student Loan Programs</searchLink><br /><searchLink fieldCode="DE" term="%22Law+Enforcement%22">Law Enforcement</searchLink>
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  Data: This article develops and tests an identity-based account of malfeasance in consumer markets. It is hypothesized that multi-brand organizational structures help predatory firms short-circuit reputational discipline by rendering their underlying identities opaque to consumer audiences. The analysis utilizes comprehensive administrative data on all for-profit U.S. colleges, an industry characterized by widespread fraud and poor (though variable) educational outcomes. Consistent with the hypothesis that brand differentiation facilitates malfeasance by reducing ex ante reputational risks, colleges which are part of multi-brand companies invest less in instruction, have worse student outcomes, and are more likely to face legal and regulatory sanctions (relative to single-brand firms). Maintaining multiple outward-facing brand identities also mitigates reputational penalties in the wake of law enforcement actions, as measured by news coverage of the legal action, and by subsequent enrollment growth. The results suggest that identity multiplicity plays a key role in allowing firms to persist in furnishing sub-standard products, even amid frequent scandals and media scrutiny. Predatory practices are facilitated not only from the inherent informational asymmetries in a given product, but also from firms' efforts to make themselves less legible to audiences. The analysis contributes to research on higher education, organizational theory, and the sociology of markets. [Additional funding for this research was provided by the University of California.]
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      – Text: English
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        PageCount: 44
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      – SubjectFull: Consumer Economics
        Type: general
      – SubjectFull: Merchandise Information
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      – SubjectFull: Deception
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      – SubjectFull: Colleges
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      – SubjectFull: Law Enforcement
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      – TitleFull: Asymmetry by Design? Identity Obfuscation, Reputational Pressure, and Consumer Predation in U.S. For-Profit Higher Education. Research & Occasional Paper Series: CSHE.5.2020
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