Everyone knows that the movie business is risky. But how risky is it? Do strategies exist that reduce risk? We investigate these questions using a sample of over 200 motion pictures. We discover that the movies are very risky indeed. Box-office revenues are asymptotically Pareto-distributed and have infinite variance. The mean is dominated by rare blockbuster movies that are located in the far right tail. There is no typical movie because box-office revenue outcomes do not converge to an average, they diverge over all scales.
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Paper provided by California Irvine - School of Social Sciences in its series Papers with number
98-99-10.
Find related papers by JEL classification: D8 - Microeconomics - - Information, Knowledge, and Uncertainty L8 - Industrial Organization - - Industry Studies: Services Z1 - Other Special Topics - - Cultural Economics
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