The Role of Reputation in Sequel Production

This paper develops a simple model of sequel production for experience goods, showing how reputation shapes a producer’s incentives. Producers differ in productivity, which determines how much effort they invest. A sequel is made only if the previous installment exceeds a quality threshold, capturing the idea that consumers base future consumption on past success. Although high-productivity producers create higher-quality originals and sequels, the conditioning on successful originals still makes sequels, on average, worse than their predecessors. This aligns with evidence of sequel underperformance in media markets.