To Review or Not to Review? Limited Strategic Thinking at the Movie Box Office
American Economic Journal: Microeconomics, 4(2): 1-26, May 2012
50 Pages Posted: 8 Aug 2012
Date Written: October 12, 2011
Film studios occasionally withhold movies from critics before their release. These cold openings provide a natural setting to apply laboratory-developed models of limited strategic thinking to the field. In a set of 1303 widely released movies, cold opening is correlated with a 10-30 percent increase in domestic box-office revenue, and a pattern of fan disappointment, consistent with the hypothesis that some moviegoers do not infer low quality from cold opening. While selection and endogeneity may play a role in these regressions, the full pattern of results is consistent with level-k and cognitive hierarchy behavioral-game-theoretic models.
Keywords: behavioral game theory, limited strategic thinking, voluntary disclosure, experimental economics
JEL Classification: D12, D82, L82, M37
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