Popular appeal and artistic merit: overcoming the experience good problem in Broadway theater

Experience goods like Broadway theatre often include an artistic component involving both a personally subjective aesthetic element as well as technical standards and cultural significance that may be challenging for the typical consumer to observe. Some consumers will likely have preferences focused on the aesthetic value while others will be more concerned with artistic merit of the production. This suggests that different consumers may find differing sources of information valuable in determining whether to make a purchase. The wisdom of the masses is likely correlated with the aesthetic element while expert opinions may help distill the larger artistic merit of the work. We examine the impact of favourable reviews by patrons and expert critics on weekly revenues for an unbalanced panel of 276 Broadway productions running for an average of 58 weeks. Results show a positive effect from both patron and critic reviews across the range of productions, with critic reviews serving a similar role to Tony Award wins. Dividing the data into musicals and non-musicals, we find positive significance for patron reviews, reputation of the director, and revival status in revenues for non-musicals while critic reviews and Tony wins are associated with significantly higher weekly revenues for musicals.