Skip to main content
×
Home
    • Aa
    • Aa

Wine as an Experience Good: Price Versus Enjoyment in Blind Tastings of Expensive and Inexpensive Wines*

  • Robert H. Ashton (a1)
Abstract
Abstract

Economic theorists maintain that wine is an experience good, a product whose quality can be evaluated only after purchase and consumption. Theory holds that consumers often rely on the price of experience goods as one cue to judge their quality. In this paper, however, I provide evidence that an important segment of wine consumers do not consider price a useful cue to quality. Specifically, I test the robustness of Goldstein et al.,'s (2008) finding that, in blind tastings, average wine drinkers consider less expensive wines to taste better than more expensive wines. Four blind tastings of 2006 red Bordeaux and 2009 white Burgundy with a price range of $20–$119 were conducted, in which members of a wine club rated their extent of enjoyment of each wine. In three of the tastings, there was no relationship between price and enjoyment, while in the other the relationship was negative, lending additional credibility to the contention that an important segment of wine consumers do not find enjoyment to increase with price. (JEL Classification: C91)

Copyright
Footnotes
Hide All
*

I am indebted to Alison Ashton for insightful comments on an earlier version, to Mani Sethuraman for excellent research assistance, and to Lila Cruikshank for help in arranging the blind tastings. I am also indebted to the anonymous reviewer, and especially to the editor, for numerous comments that have improved the paper.

Footnotes
Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

F. Allen (1984). Reputation and product quality. Rand Journal of Economics, 15, 311327.

M.R. Darby , and E. Karni (1973). Free competition and the optimal amount of fraud. Journal of Law and Economics, 16, 6788.

R. Deliza , and H.J.H. MacFie (1996). The generation of sensory expectation by external cues and its effect on sensory perception and hedonic ratings: A review. Journal of Sensory Studies, 11, 103128.

P. Dubois , and C. Nauges (2010). Identifying the effect of unobserved quality and expert reviews in the pricing of experience goods: Empirical application on Bordeaux wine. International Journal of Industrial Organization, 28, 205212.

E. Gerstner (1985). Do higher prices signal higher quality? Journal of Marketing Research, 22, 209215.

C. Hanf , and B. von Wersebe (1994). Price, quality, and consumers’ behavior. Journal of Consumer Policy, 17, 335348.

C. Hay (2010). The political economy of price and status formation in the Bordeaux en primeur market: The role of wine critics as rating agencies. Socio-Economic Review, 8, 685707.

G.V. Jones , and K. Storchmann (2001). Wine market prices and investment under uncertainty: An econometric model for Bordeaux crus classés. Agricultural Economics, 26, 115133.

K.L. Keller (2009). Managing the growth tradeoff: Challenges and opportunities in luxury branding. Brand Management, 16, 290301.

L. Lee , S. Frederick , and D. Ariely (2006). Try it, you'll like it: The influence of expectation, consumption, and revelation on preferences for beer. Psychological Science, 17, 10541058.

P. Mahenc , and V. Meunier (2003). Forward markets and signals of quality. RAND Journal of Economics, 34, 478494.

A. Mantonakis , P. Rodero , I. Lessehaeve and R. Hastie (2009). Order in choice: Effects of serial position on preferences. Psychological Science, 20, 13091312.

P. Milgrom , and J. Roberts (1986). Price and advertising signals of product quality. Journal of Political Economy, 94, 796821.

G.A. Miller (1956). The magical number seven, plus or minus two: Some limits on our capacity for processing information. Psychological Review, 63, 8197.

J.R. Miller , I. Genc , and A. Driscoll (2007). Wine price and quality: In search of a signaling equilibrium in 2001 California cabernet sauvignon. Journal of Wine Research, 18, 3546.

P. Nelson (1970). Information and consumer behavior. Journal of Political Economy, 78, 311329.

E. Oczkowski (1994). A hedonic price function for Australian premium table wine. Australian Journal of Agricultural Economics, 38, 93110.

H. Plassmann , J. O'Doherty , B. Shiv , and A. Rangel (2008). Marketing actions can modulate neural representations of experienced pleasantness. Proceedings of the National Academy of Sciences, 105, 10501054.

C.C. Preston , and A.M. Colman (2000). Optimal number of response categories in rating scales: Reliability, validity, discriminating power, and respondent preferences. Acta Psychologica, 104, 115.

A.R. Rao , and K.B. Monroe (1989). The effect of price, brand name, and store name on buyers’ perceptions of product quality: An integrative review. Journal of Marketing Research, 26, 351357.

P.C. Riesz (1979). Price-quality correlations for packaged food products. Journal of Consumer Affairs, 13, 236247.

M.H. Riordan (1986). Monopolistic competition with experience goods. Quarterly Journal of Economics, 101, 265279.

P.W. Roberts , and R. Reagans (2007). Critical exposure and price-quality relationships for new world wines in the U.S. market. Journal of Wine Economics, 2, 5669.

R. Schmalensee (1978). A model of advertising and product quality. Journal of Political Economy, 86, 485503.

H. Schnabel , and K. Storchmann (2010). Prices as quality signals: Evidence from the wine market. Journal of Agricultural & Food Industrial Organization, 8, 121.

C. Shapiro (1983). Premiums for high quality products as returns to reputations. Quarterly Journal of Economics, 98, 659679.

G.J. Tellis , and B. Wernerfelt (1987). Competitive price and quality under asymmetric information. Marketing Science, 6, 240253.

J. Tirole (1996). A theory of collective reputations (with applications to the persistence of corruption and to firm quality). Review of Economic Studies, 63, 122.

R.L. Weil (2001). Parker v. Prial: The death of the vintage chart. Chance, 14, 2731.

R.L. Weil (2005). Analysis of reserve and regular bottlings: Why pay for a difference only the critics claim to notice? Chance, 18, 915.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Wine Economics
  • ISSN: 1931-4361
  • EISSN: 1931-437X
  • URL: /core/journals/journal-of-wine-economics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords:

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 3
Total number of PDF views: 76 *
Loading metrics...

Abstract views

Total abstract views: 338 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 23rd August 2017. This data will be updated every 24 hours.