Does Conflict of Interest Lead to Biased Coverage? Evidence from Movie Reviews

55 Pages Posted: 10 Nov 2014 Last revised: 11 Nov 2014

See all articles by Stefano DellaVigna

Stefano DellaVigna

University of California, Berkeley; National Bureau of Economic Research (NBER)

Johannes Hermle

University of Bonn

Date Written: November 2014

Abstract

Media outlets are increasingly owned by conglomerates, inducing a conflict of interest: a media outlet can bias its coverage to benefit companies in the same group. We test for bias by examining movie reviews by media outlets owned by News Corp.—such as the Wall Street Journal—and by Time Warner— such as Time. We use a matching procedure based on reported preferences to disentangle bias due to conflict of interest from correlated tastes. We find no evidence of bias in the reviews for 20th Century Fox movies in the News Corp. outlets, nor for the reviews of Warner Bros. movies in the Time Warner outlets. We can reject even small effects, such as biasing the review by one extra star (out of four) every 13 movies. We test for differential bias when the return to bias is plausibly higher, examine bias by media outlet and by journalist, as well as editorial bias. We also consider bias by omission: whether the media at conflict of interest are more likely to review highly-rated movies by affiliated studios. In none of these dimensions do we find systematic evidence of bias. Lastly, we document that conflict of interest within a movie aggregator does not lead to bias either. We conclude that media reputation in this competitive industry acts as a powerful disciplining force.

Suggested Citation

DellaVigna, Stefano and Hermle, Johannes, Does Conflict of Interest Lead to Biased Coverage? Evidence from Movie Reviews (November 2014). NBER Working Paper No. w20661, Available at SSRN: https://ssrn.com/abstract=2521419

Stefano DellaVigna (Contact Author)

University of California, Berkeley ( email )

Economics Department
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Berkeley, CA 94720
United States
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HOME PAGE: http://emlab.berkeley.edu/users/sdellavi/

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Johannes Hermle

University of Bonn ( email )

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Bonn, D-53012
Germany

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