Date of Award

Spring 6-9-2024

Document Type

Thesis (Undergraduate)

Department

Quantitative Social Science

First Advisor

Michael Herron

Abstract

Existing theatre industry literature is comprised of several arguments regarding the amount of literature on the theatre industry. Several scholars argue that the theatre industry is not extensively studied in economics due to misconceptions about the profitability of theatre, the misalignment between artists’ actions and economic “rationality,” and the contributions of the arts industries to the broader U.S. economy. Beyond this academic debate, economic research on the theatre industry explores the nuances of theatre demand and the influence of audience preferences and demographics on theatre ticket demand.

This paper presents a game-theoretic model to study the strategic season selection decisions of theaters. This model describes a two-theater city where theaters are competing to maximize their audience turnout under the assumption that increased ticket sales results in increased profits. Based on the relative locations of the two theaters and the preferences of local theatergoers, the two theaters select one of two show genres to produce. The model seeks to understand the conditions under which two theaters may produce the same show genre. The model is simulated by varying the locations of both theaters, the strengths of local audience preferences, and the proportions of audience types; the results of this model are presented in a series of graphs identifying the conditions under which pure and mixed strategy equilibria occur.

This analysis is unique to the theatre industry due to the industry’s uniquely high risk factor and the complete commitment of each player to a singular strategy. By framing theaters as profit-maximizing organizations that must generate enough revenue to support the theatre they are creating, game theory offers insights into the genres theaters should produce in order to maximize audience turnout, using audience turnout as an instrument for revenue.

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