Tag: imdb

On Uppi2’s top rating

So it appears that my former neighbour Upendra’s new magnum opus Uppi2 is currently the top rated movie on IMDB, with a rating of 9.7/10.0. The Times of India is so surprised that it has done an entire story about it, which I’ve screenshot here: Screen Shot 2015-08-17 at 8.50.33 pm

The story also mentions that another Kannada movie RangiTaranga (which I’ve reviewed here) is in third spot, with a rating of 9.4 out of 10. This might lead you to wonder why Kannada movies have suddenly turned out to be so good. The answer, however, lies in simple logic.

The first is that both are relatively new movies and hence their ratings suffer from “small sample bias”. Of course, the sample isn’t that small – Uppi2 has received 1900 votes, which is 3 times as much as its 1999 prequel Upendra. Yet, it being a new movie, only a subset of the small set of people who have watched it so far would have reviewed it.

The second is selection bias. The people who see a movie in its first week are usually the hardcore fans, and in this case it is hardcore fans of Upendra’s movies. And hardcore fans usually find it hard to have their belief shaken (a version of what I’ve written about online opinions for Mint here), and hence they all give the movie a high rating.

As time goes by, and people who are not as hardcore fans of Upendra start watching and reviewing the movie, the ratings are likely to rationalise. Finally, ratings are easy to rig, especially when samples are small. For example, an Upendra fan club might have decided to play up the movie online by voting en masse on IMDB, and pushing up its ratings. This might explain both why the movie already has 1900 ratings in four days, and most of them are extremely positive.

The solution for this is for the rating system (IMDB in this case) to pay more weightage for “verified ratings” (by people who have rated more movies in the past, for instance), or remove highly correlated ratings. Right now, the rating algorithm seems pretty naive.

Coming back to Uppi2, from what I’ve heard from people, the movie is supposed to be really good, though perhaps not 9.7 good. I plan to watch the movie in the next few days and will write a review once I do so.

Meanwhile, read this absolutely brilliant review (in Kannada) written by this guy called “Jogi”

Pricing My Best Friend’s Wedding

Any of you remember this movie called “My Best Friend’s Wedding”? If you don’t, here is a brief description of the plot. Julia Roberts and Dermot Mulroney (had to look up imdb to remember his name) have this agreement that if they are both single as of her 28th birthday, they will get married to each other. As it happens, 3 weeks before that, the hero announces that he’s found a woomaan and is going to get married to her, much to the dismay of the heroine, who now puts fight to somehow spoil this new relationship.

I was thinking of this kind of arrangement as a financial product. Actually, the movie has what I call as the “European version”. More complicated is the “American version” which I describe here. Basically I give you the OPTION to marry me on any day before my 28th birthday (6th Dec 2010). That would be simple enough to “price” (or “value”, to put it in layman’s terms) – it is a standard American option. However, let me add this twist into it. I also reserve the right to withdraw this option on any day before expiry or exercise.

So basically some day before my 28th birthday I can wake up and cancel this option that I’ve given you. Now the challenge is to price this. One thing that is obvious is that the value of this is now less than the value of the pure American option. But pricing it is a challenge (though, thinking about it carefully, it shouldn’t be too hard to solve. I think we can use option-on-option fundaes in order to price it, but still it’s nontrvial).

The European option, of course (as it is done in My Best Friend’s Wedding) easier to price. Basically, there are two events that need to happen on the day of expiry for the option (ok technically it isn’t an option since if these two events happen, then the parties are forced to execute the contract) and so it can be easily modeled using a two-factor model. The American, as we discussed, is tougher (though I’m sure that if I were to present this problem to my colleagues, they’d solve it in a jiffy).

So the reason I’m writing this is that I’m planning to enter this kind of a deal with someone. And I’m wondering if it’s better to enter into a European deal or into an American. Remember that if it is the “American” deal, I’ll be giving away the option (to marry me before either my 28th birthday or I withdraw the option) for free. Considering this, under what conditions should I try to sign the European contract, and under what conditions should I give away the American?

Also, how does the pricing of the American option change if I’m allowed to give it away to more than one person (with the understanding that as soon as one person exercises the option, I withdraw the option from all the other people I’ve given it to). And typically, will I be able to get more benefit in total by giving away this American option to a number of people than if I give it away to one person (assuming I’m indiffernet between all these people with respect to marriage).

Ok it’s late in the night and it’ s my third post in the last 1 hour, so it might be a bit muddled up. Also, you might find it a bit too technical (remember that I’m a quant). Nevertheless, I hope I’ve been able to communicate what I wanted to communicate. And am looking forward to your advice on this.