Darren Filson (Claremont Graduate University) Fernando Fabre (Universidad Anahuac del Sur) Alfredo Nava (Universidad Anahuac del Sur) Paola Rodriguez (Universidad Anahuac del Sur)
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The current literature on sharing contracts emphasizes the importance of asymmetric information and typically assumes that one party is risk neutral while the other is risk averse. This paper describes a real-world contract that is widely used - the movie exhibition contract - and argues that asymmetric information is not the main feature of the environment that leads to sharing. The explanation that fits the facts better is simply that distributors and exhibitors are both risk averse. The analysis suggests that two-sided risk aversion is important in determining contracts.
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Find related papers by JEL classification: L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
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