The Review of Economics and Statistics Vol. 70 No. 2 1988
Auctions with Constrained Information: Blind Bidding for Motion Pictures
Abstract
Toward explaining why movie exhibitors have sought legislation requiring distributors to trade-screen films before soliciting bids, a simulation of a Nash equilibrium in an auction suggests that without previews bidders may suffer losses i n expected utility. This supports the hypothesis that risk aversion a nd competition render exhibitors unable to reduce their bids enough t o compensate fully for the dearth of information. An error-components model is used to analyze a unique industry dataset. The results conf irm that a component of the bid is lower (raising mean return), while the variance of return is greater for blindly-licensed films.
- DOI
- 10.2307/1928302
- Volume
- 70
- Issue
- 2
- Pages
- 191
- Sources
- crossref openalex