Experts, Information, Reviews, and Coordination: Evidence on How Literary Prizes Affect Sales

We study the causal effect of literary awards on book sales, using France's most prestigious prize, the Goncourt. For this, we implement a regression discontinuity design, taking advantage of the fact that a committee of experts gives the prize to the book receiving the most votes. We observe that the Goncourt increases sales by 350 percent and that this effect is larger for books that sold fewer copies before the award. Additional results show that the prize results in more reviews on Amazon but increases the probability that they are negative. Finally, we report that the effect on sales is partly driven by an increase in word of mouth. These findings are consistent with a model where the Goncourt provides information on the existence of a book and where consumers use the prize as a quality signal and a coordination device but, as a result, read books that are too far from their tastes. This interpretation is backed by the finding that, despite its positive effect on sales, the Goncourt des Lycéens, a prize based on the same list of books as the Goncourt but awarded by a group of high-school students whose tastes are arguably doser to the public's than to those of experts, has no effect on the sentiment of reviews.