Fooled By Randomness

Great piece in the LA Times by Leonard Mlodinow, a physicist/screenwriter, on how the entire Hollywood hit-making machine is little better than a lottery. As Paul Kedrosky puts it, "The article synthesizes useful material from information cascades, Kahneman &  Tversky, Arthur De Vany's work, and Hollywood lore to show that most of what is called success in Hollywood is more like dumb luck." Quote from the story:

But if picking films is like randomly tossing darts, why do some people hit the bull's-eye more often than others? For the same reason that in a group of apes tossing darts, some apes will do better than others. The answer has nothing to do with skill. Even random events occur in clusters and streaks.

Imagine this game: We line up 20,000 moviegoers who, one by one, flip a coin. If the coin lands heads, they see "X-Men"; if the coin lands tails, it's "The Da Vinci Code." Since the coin has an equal chance of coming up either way, you might think that in this experimental box-office war each film should be in the lead about 10,000 times. But the mathematics of randomness says otherwise: The most probable number of lead changes is zero, and it is 88 times more probable that one of the two films will lead through all 20,000 customers than that each film leads 10,000 times.

Readers who share my admiration for Nassim Taleb will recognize this as a "Black Swan" problem. His classic book, Fooled by Randomness : The Hidden Role of Chance in Life and in the Markets, is highly recommended, even (especially!) for Hollywood studio chiefs.

Comments

[Didier DURAND]

Your link on Black Swan is broken. Can you correct it? (interested in reading it)

[Chris Anderson]

Didier,

Sorry about that (it looks like Nassim took down that paper in anticipation of his Black Swan book, which will be out later this year). I've changed the link to another one of his Black Swan articles, this one applying it to the arts, which is actually more appropriate for a Hollywod context.

Chris

[Dan Hill]

Look at Dan Brown's earlier novels. They were failures originally. They didn't get any better, but they started selling like crazy after Da Vinci Code was a bigt success...

[Vinny Lingham]

Interestingly, the Hollywoord Stock Exchange (http://www.hsx.com) is a fantasy game which traders trade the value of the stock based on expected takings at the box office. Given the nature of exchanges of this type, the stock price often reflects the reality of what transpires at the box office - perfect market theory in action.