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

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

Multiple version iconThere are 2 versions of this paper

Date Written: October 12, 2011

Abstract

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

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 (October 12, 2011). American Economic Journal: Microeconomics, 4(2): 1-26, May 2012, Available at SSRN: https://ssrn.com/abstract=2126743

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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