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"Uncertainty in the Movies: Does Star Power Reduce the Terror of the Box Office?"

Author

Listed:
  • De Vany, A.
  • Walls, W.D.

Abstract

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.

Suggested Citation

  • De Vany, A. & Walls, W.D., 1999. ""Uncertainty in the Movies: Does Star Power Reduce the Terror of the Box Office?"," Papers 98-99-10, California Irvine - School of Social Sciences.
  • Handle: RePEc:fth:calirv:98-99-10
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    More about this item

    Keywords

    CINEMA ; UNCERTAINTY ; CULTURE;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • L8 - Industrial Organization - - Industry Studies: Services
    • Z1 - Other Special Topics - - Cultural Economics

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