Essays on resource allocation across and within firms in mediated markets /

Saved in:
Bibliographic Details
Author / Creator:Tutterow, Craig, author.
Ann Arbor : ProQuest Dissertations & Theses, 2015
Description:1 electronic resource (250 pages)
Format: E-Resource Dissertations
Local Note:School code: 0330
URL for this record:
Hidden Bibliographic Details
Other authors / contributors:University of Chicago. degree granting institution.
Notes:Advisors: James Evans; Amanda Sharkey Committee members: Andrew Abbott; Ronald Burt.
Dissertation Abstracts International, Volume: 77-02(E), Section: A.
Summary:Quality metrics are pervasive in contemporary society and guide many of our most intimate and consequential decisions. Intermediaries producing quality estimates are influential across a broad range of social activities, such as mate selection, college choice, and cultural consumption. Information intermediaries synthesize large amounts of relevant data to produce reduced-form recommendations for users in the shape of ratings, rankings or recommendations. I show how certain types of information intermediaries are capable of amplifying vertical and compressing horizontal variation in one simulated and two historical contexts. In particular, I focus on the activities of intermediaries and the structure of the intermediary market as important contingency factors that give rise to this dynamic.
In the first chapter, I explore the consequentiality of information intermediaries for the accuracy and variation of consumer perceptions in a mediated market. In a decentralized social network, errors in consumer perception are contained within cliques and cancel each other out. Since intermediaries centralize communication, they are capable of reducing variation, and producing either large gains or losses in the accuracy of consumer ex ante perceptions about the quality of product offerings.
In the first empirical chapter, I show how competition and fragmentation in intermediary structure reduces the ability of intermediaries to influence consumer and producer behavior in a mediated market. For this case, I compare three sectors in U.S. higher education: law schools, business schools, and undergraduate national research universities. I find that the business school market, which had competition between intermediaries, experienced less growth in status inequality compared to the other two cases, where US News & World Report effectively achieved monopoly. The ability of rankings to impact student decisions is mostly contained to high status schools. However, I show that lower ranked schools in the monopoly conditions conform to ranking criteria at the same rate as their higher ranked peers, in spite of receiving less of a benefit for doing so.
This chapter is followed by a discussion of the discrepancy between the relatively modest estimated effect of rankings on school choice, and the enormous transformative expense of schools and students conforming to the factors valued in the ranking criteria. As an illustrative I show that rankings construct an incentive structure wherein admissions departments seek more applications in order to reject more students and reduce their acceptance rate, creating uncertainty for students about their likelihood of admission into any one school. This encourages students to apply to more schools, which further lowers acceptance rates. For schools, more applications per student means a lower probability that any one given student will accept their offer of admission, due to an increased probability that they will receive an offer from a competing school. This creates uncertainty for schools about their ability to meet enrollment targets, which causes them to seek even more applications. I document how this feedback-loop of uncertainty has led to the emergence of two full-service consulting industries that resolve uncertainty for both sides of the market.
In the last empirical chapter, I document the emergence of public accounting, an intermediary profession, and their impact on the early 20th century US railroad industry. In particular, I show how public accountants and the accounting standards imposed by the Interstate Commerce Commission, combined to produce increased spending on clerk salaries. I show that this bureaucratization was not associated with gains in operating efficiency, but rather with capital investment and regulatory action, and conclude that the new clerks of this era were producing information for external constituents. That is, new clerks were producing information that allowed external stakeholders to better allocate resources across firms. (Abstract shortened by UMI.).