Cristhian Molina

In markets with asymmetric information, quality certification is intended to reduce uncertainty. But what happens when firms can strategically manipulate the signal? This paper studies the full lifecycle of a quality signal, from its strategic creation by institutions to its ultimate effect on student choice. We first document that universities in Chile engage in "window dressing" before seeking accreditation, as they improve malleable, evaluated metrics like on-time graduation rates rather than making deep, structural investments. Using administrative data and exploiting staggered accreditation decisions in a difference-in-differences framework, we then test how students respond to this potentially gamed signal. Despite the institutional gaming, students react strongly. First-time accreditation increases applications by 10.2% and enrollment by 7.3%, attracting academically stronger students and improving student-program match. Remarkably, these effects are equitable, appearing just as strong for students from low-income backgrounds. The power of the signal, however, is context-dependent, amplified by institutional reputation and weakened under mandatory regimes. These results provide a more complete view of disclosure markets and offer lessons for the design of effective quality assurance policies.