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Soft Information, Hard Sell: The Role of Soft Information in the Pricing of Intellectual Property

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  • William N. Goetzmann
  • Vicente Pons-Sanz
  • S. Abraham Ravid

Abstract

There is a growing literature on the differential impact of soft' vs. hard' information on organizational structure and behavior. This study is an attempt to empirically quantify the value of soft information, using a data-base on the market for screenplays. Script quality is difficult to estimate without subjective evaluation. Therefore soft information should be an integral part of the pricing of these intellectual assets. In our empirical analysis, we find that hard information' (reputation) variables as well as soft information' proxies are priced. Screenplays with high soft information content are priced significantly lower than high concept' harder information'- type scripts. We also follow the screenplays to production, and find that buyers seem to be able to forecast the success of a script, paying more for screenplays resulting in more successful films. In other words, high concept' (harder information) screenplays sell for more and result in more successful movies.

Suggested Citation

  • William N. Goetzmann & Vicente Pons-Sanz & S. Abraham Ravid, 2004. "Soft Information, Hard Sell: The Role of Soft Information in the Pricing of Intellectual Property," NBER Working Papers 10468, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:10468
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    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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