Hollywood’s Movie Production Companies in Game Theoretic Model

Abstract

Assume that Dismal Science Cinema enters during the 4th of July and possesses private information regarding together with rational expectations, adaptive expectations, and a follow-up to the previously-released blockbuster. The films that the aforementioned studio is about to release comprises of different genres such as romantic comedy, drama, and etc. It also has to decide how to allocate the remaining 14 films throughout the year. Additionally, Dismal Cinema signals to the other film studios how serious it is in terms of spending millions of dollars on advertising for its blockbuster. Knowing that Dismal Cinema has already attained a large portion of the audience, the other studios would appreciate following “Rational Expectations”. After Dismal Cinema takes action and decides to release its blockbuster on the 4th of July, the other film studios observe and stick to their next best alternative which can enable them to possess a large portion of the small revenue pie remained post to the big bite of the first mover.