Entertainment Utility from Skill and Thrill

Abstract

This paper uses revealed preference methods to estimate demand for non-instrumental information in entertainment. I do this by examining the associated with the trajectory of an event, which includes both suspense and surprise, and the of performers in an event. I apply the theory presented in Ely et al. (2015) to conduct an empirical analysis that examines the effect of thrill on consumer attention. I extend the Ely et al. (2015) framework by examining spectator preferences for characteristics of the performers themselves, which I call skill. I use game-specific, high-temporal frequency television ratings data from the National Basketball Association (NBA) to measure spectator responses to skill and thrill. First, I find that a doubling of skill present in a game leads to an approximately 11% increase in initial viewer turnout, while the expected thrill of a game has no statistically significant impact. Next, I show that thrill during a game increases viewership by 7-30%, while a doubling of skill on the court during a specific portion of a game leads to a 1.9-2.4% increase in viewership, depending on specification. Interestingly, I find a negative interactive effect between suspense and skill, suggesting that heightened suspense leads to differentially higher viewership with lower skill on the court. The findings suggest that skill of information-conveying agents primarily impacts viewership on the extensive margin (across games), while thrill is highly time-dependent and primarily impacts viewership on the intensive margin (within games). These findings have important implications for entertainment media companies, including leagues and television broadcasters, and advertisers.