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

TLDR

Film studios occasionally withhold movies from critics before their release. The study applies laboratory-developed models of limited strategic thinking to the field of movie releases. Cold openings—where studios withhold movies from critics before release—serve as the natural setting for this application. Cold openings are associated with a 10–30 % rise in domestic box‑office revenue and a pattern of fan disappointment, supporting the hypothesis that some moviegoers do not infer low quality from cold openings; the results align with level‑k and cognitive hierarchy behavioral‑game‑theoretic models, though selection and endogeneity may play a role. JEL codes: D12, D82, L82, M37.

Abstract

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)