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)
Brown, Alexander L., Colin F. Camerer, and Dan Lovallo.
"To Review or Not to Review? Limited Strategic Thinking at the Movie Box Office."
American Economic Journal: Microeconomics,
Consumer Economics: Empirical Analysis
Asymmetric and Private Information