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

  • Alexander L. Brown
  • Colin F. Camerer
  • Dan Lovallo

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)

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Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 4 (2012)
Issue (Month): 2 (May)
Pages: 1-26

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Handle: RePEc:aea:aejmic:v:4:y:2012:i:2:p:1-26
Note: DOI: 10.1257/mic.4.2.1
Contact details of provider: Web page: https://www.aeaweb.org/aej-micro
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