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American Economic Journal: Microeconomics: Vol. 4 No. 2 (May 2012)

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

Article Citation

Brown, Alexander L., Colin F. Camerer, and Dan Lovallo. 2012. "To Review or Not to Review? Limited Strategic Thinking at the Movie Box Office." American Economic Journal: Microeconomics, 4(2): 1-26.

DOI: 10.1257/mic.4.2.1

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 1,303 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. (JEL D12, D82, L82, M37)

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Authors

Brown, Alexander L. (TX A&M U)
Camerer, Colin F. (CA Institute of Technology)
Lovallo, Dan (U Sydney)

JEL Classifications

D12: Consumer Economics: Empirical Analysis
D82: Asymmetric and Private Information
L82: Entertainment; Media
M37: Advertising

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