Strategy Fads and Competitive Convergence: An Empirical Test for Herd Behavior in Prime-Time Television Programming

Abstract

The economics literature contains many theoretical analyses of imitation and differentiation strategies but relatively few empirical studies of these topics. This paper aims to address that shortcoming. I analyze program introductions by television networks and then compare the payoffs to imitative and differentiated introductions. The analysis indicates that the networks imitate each other when introducing new programs and that, on average, imitative introductions underperform differentiated introductions. These results are consistent with theoretical models of herd behavior but are difficult to explain using standard models of spatial competition or the possibility of omitted variable bias.