Work In ProgressAdvertising under Learning from Reviews (Job Market Paper)
Many online platforms provide consumers with information about product quality through expert and peer reviews. The availability of such information may change the way that consumers respond to advertising and, in turn, affect firms' advertising strategies. Using data from the motion picture industry, I estimate the effect of advertising on consumer choices depending on whether or not consumers have access to expert reviews. Given the demand estimates, I evaluate a studio's optimal advertising choice depending on the availability of expert reviews. My results show that advertising and expert reviews both have significant impacts on demand. For an average movie, when expert reviews are absent, advertising is about 2.25 times as effective at increasing the opening-week revenue as it is when expert reviews are available. It would appear that expert reviews help consumers make better choices, as the percentage of consumers who choose a movie they would not watch if they were better informed drops by 0.74% on average. Additionally, with the presence of expert reviews, the median studio saves 76.60% of advertising expenditure and studios' profits increase by $2.80 million per movie on average. Audience v Critics: the Effect of Reviews on Box Office Revenue
I inspect how critic reviews and audience reviews impact a movie’s box office performance differently. I use a Bayesian Learning model to model the process of consumers forming their beliefs about a movie’s quality, based on their prior, critic reviews, and audience reviews. Consumers then make a discrete choice from the set of movies that are available in a given week. From several online resources, I collect a unique dataset that contains weekly box office revenue, critic reviews, online user reviews, and movie characteristics for 665 movies released in 2011-2015. I estimate the model and show that critic reviews and audience reviews have significant and heterogeneous effects on movies produced by major studios or minor studios, movies reviewed by critics before release (regular) or not (cold-opened), and movies with different advertising expenditures. Counterfactual analysis shows that forcing movies to be screened before release harms 71% of the cold-opened movies; consumers benefit from the availability of audience reviews by watching more good movies and fewer bad movies, with the quality measured from the perspective of consumers. Presentations
Other Research“Hollywoods Response to the Growing Chinese Movie Market”, 2016
“Social Network Effect on Ratings of TV Series on TV Networks in the US: Evidence from Twitter”, 2013 “Cultural Tourism in the Kimberley, Australia: the Present and the Future”, 2013 “Development of the Cluster of Movie Industry in Hengdian, China” (with Jingcao Huang and Ruyang Jiang), 2011 “Occupations and Living Standard of Migrant Workers in Beijing” (group project), 2011 Publications“Advantages of Fuzhou in Cross-Strait Trade and Policy Implications” (with Jingcao Huang and Ruyang Jiang), Fujian Tribune, 2011(8)
“Necessity and Feasibility of Cross-Strait Free Trade Area” (with Jingcao Huang and Ruyang Jiang), Development Research, 2011(1) |