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

A. De Vany and W. Walls

Working Papers from California Irvine - School of Social Sciences

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.

Keywords: CINEMA; UNCERTAINTY; CULTURE (search for similar items in EconPapers)
JEL-codes: D8 L8 Z1 (search for similar items in EconPapers)
Pages: 59 pages
Date: 1999
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Citations: View citations in EconPapers (58)

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Persistent link: https://EconPapers.repec.org/RePEc:fth:calirv:98-99-10

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