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

Alexander L Brown, Colin F Camerer, Dan Lovallo
2012 American Economic Journal: Microeconomics  
Film distributors occasionally withhold movies from critics before their release. Cold openings provide a natural field setting to test models of limited strategic thinking. In a set of 856 widely released movies, cold opening produces a significant 15% increase in domestic box office revenue (though not in foreign markets and DVD sales), consistent with the hypothesis that some moviegoers do not infer low quality from cold opening. Structural parameter estimates indicate 1-2 steps of strategic
more » ... thinking by moviegoers (comparable to experimental estimates). However, movie studios appear to think moviegoers are sophisticated since only 7% of movies are opened cold.
doi:10.1257/mic.4.2.1 fatcat:rh4czogiwrfthgqrjuxo2v4m7m