Quality Effects and the Value of Information on the Demand for Broadway Shows

In this paper we estimate a demand curve for Broadway shows and estimate average willingness to pay for information on the quality of the show. The data employed are weekly time series observations on attendance to Broadway performances and individual characteristics of each Broadway show playing between December 1995 and June 2003. Our primary measure of quality is the number of Tony Awards won by each production. We use a discrete choice model which allows us to separate the e¤ect of prices and quality on the shows. attendance and we account for the endogeneity of prices and explicitly model the endogeneity of the outcome of the Tony award. Our results show Broadway theatre demand slopes down and the Tony Awards variable has a positive e¤ect on the shows. shares of occupied space, which turns into a positive willingness to pay for this quality indicator. Our results are robust to the inclusion of several types of .xed e¤ects including show, theatre, yearly, and monthly; di¤erent ways to model the endogeneity of price and the Tony award.