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Measuring Word of Mouth's Impact on Theatrical Movie Admissions
Author(s) -
Moul Charles C.
Publication year - 2007
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1530-9134.2007.00160.x
Subject(s) - word of mouth , variation (astronomy) , word (group theory) , affect (linguistics) , advertising , variance (accounting) , transmission (telecommunications) , information transmission , psychology , computer science , communication , linguistics , business , telecommunications , computer network , philosophy , physics , accounting , astrophysics
Information transmission among consumers (i.e., word of mouth) has received little empirical examination. I offer a technique that can identify and measure the impact of word of mouth, and apply it to data from U.S. theatrical movie admissions. While variables and movie fixed effects comprise the bulk of observed variation, the variance attributable to word of mouth is statistically significant. Results indicate approximately 10% of the variation in consumer expectations of movies can be directly or indirectly attributed to information transmission. Information appears to affect consumer behavior quickly, with the length of a movie's run mattering more than the number of prior admissions.