Monday, March 02, 2009

Signalling, Cognitive Reflection and the Movie Business

What does a "cold opening" mean in the movie business? According to Colin Camerer and colleagues (here), "Usually, the movies that are not shown in advance are below-average movies as ultimately rated by both critics and moviegoers... but there is a 15 percent increase in box office revenue from not first showing the movie." This is a "cold opening".

So why does it work? Camerer thinks it has to do with people who don't think strategically--who don't have high strategic IQs. "We think it means you can fool some of the people some of the time," he says. "Specifically, you can fool the people who don't pay attention to reviews and who also don't realize that not wanting to show a movie to critics is a bad sign."

1 comment:

Martin Ryan said...

I'm interested in this idea of "strategic IQ" that Camerer mentions. I think there could be a lot to gain from putting chess on the primary school curriculum - even just 30 mins. of instruction per week.