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Published February 21, 2012 | Submitted
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To Review or Not to Review? Limited Strategic Thinking at the Movie Box Office

Abstract

Film distributors occasionally withhold movies from critics before their release. Cold openings provide a natural field setting to test models of limited strategic thinking. In a set of 856 widely released movies, cold opening produces a significant 15% increase in domestic box office revenue (though not in foreign markets and DVD sales), consistent with the hypothesis that some moviegoers do not infer low quality from cold opening. Structural parameter estimates indicate 1–2 steps of strategic thinking by moviegoers (comparable to experimental estimates). However, movie studios appear to think moviegoers are sophisticated since only 7% of movies are opened cold.

Additional Information

Thanks to audiences at Caltech, especially David Grether, Stuart McDonald, Tom Palfrey, Charles Plott, Robert Sherman, and Leeat Yariv. Thanks also to audiences at Chicago GSB, Berkeley, Yale Graduate Student Conference on Behavioral Science, 2007 North American ESA, SJDM and SEA. Thanks to Dan Knoepfle for proofreading, Sera Linardi for a suggestion that lead to an 8-fold improvement in CH runtimes, Esther Hwang, Carmina Clarke, Ferdinand Dubin, and especially Jonathan Garrity for help with data collection. Direct correspondence to Alexander L. Brown at abrown@econmail.tamu.edu.

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August 20, 2023
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