Information, Adaptive Contracting, and Distributional Dynamics: Bayesian Choice, Bose-Einstein Statistics, and the Movies

Audiences discover what movies they like and spread the word. Information feedback produces Bose-Einstein dynamics in the motion picture box office revenue distribution. Information cascades generate box office `hits' (superstars) and `flops' (antistars). The revenue distribution evolves recursively over the `run' as a mixture of the `opening' and a stochastic competition among films. The motion picture run is decentralized, adaptive, and self-organizing: semi-stationary admission prices, local information, and contingency-rich contracts match the film rental price and the supply of theatrical engagements to demand. I. Introduction The hard part about understanding the motion picture industry is coming to grips with the way demand and supply operate. Film audiences make hits or flops and they do it, not by revealing preferences they already have, but by discovering what they like. When they see a movie they like, they make a discovery and they tell their friends about it; reviewers d..