To Review or Not to Review? Limited Strategic Thinking at the Movie Box Office

67 Pages Posted: 8 Oct 2008 Last revised: 21 Feb 2009

See all articles by Alexander L. Brown

Alexander L. Brown

Texas A&M University - Department of Economics

Colin Camerer

California Institute of Technology - Division of the Humanities and Social Sciences

Dan Lovallo

University of Western Australia

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Date Written: February 9, 2009

Abstract

Film distributors occasionally withhold movies from critics before their release. Cold openings provide a natural field setting to test models of limited strategic thinking. In a set of 856 widely released movies, cold opening produces a significant 15% increase in domestic box office revenue (though not in foreign markets and DVD sales), consistent with the hypothesis that some moviegoers do not infer low quality from cold opening. Structural parameter estimates indicate 1-2 steps of strategic thinking by moviegoers (comparable to experimental estimates). However, movie studios appear to think moviegoers are sophisticated since only 7% of movies are opened cold.

Keywords: behavioral game theory, limited strategic thinking, voluntary disclosure, experimental economics

JEL Classification: C72, D82, C90, L15

Suggested Citation

Brown, Alexander L. and Camerer, Colin F. and Lovallo, Dan, To Review or Not to Review? Limited Strategic Thinking at the Movie Box Office (February 9, 2009). Available at SSRN: https://ssrn.com/abstract=1281006 or http://dx.doi.org/10.2139/ssrn.1281006

Alexander L. Brown (Contact Author)

Texas A&M University - Department of Economics ( email )

4228 TAMU
College Station, TX 77843-4228
United States
979-862-8084 (Phone)
979-847-8757 (Fax)

HOME PAGE: http://econweb.tamu.edu/abrown/

Colin F. Camerer

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States
626-395-4054 (Phone)
626-432-1726 (Fax)

Dan Lovallo

University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
AUSTRALIA

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