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Reduced form evidence on belief updating under asymmetric information—consumers’ response to wine expert opinions

Author

Listed:
  • Céline Bonnet
  • James Hilger
  • Sofia B Villas-Boas

Abstract

We estimate the effect of quality labels on purchases through a retail field experiment. Utilising product-level panel scanner and product characteristic data for both labelled and unlabelled wines we estimate the average and heterogeneous effect on purchases. Consistent with earlier work, we find an average effect that is positively correlated with scores. We advance the consumer belief and product information literature on two fronts. First, higher scores matter more for lower priced products. Second, spillover effects impact sales of untreated wines; these effects can be positive or negative and are impacted by the average score and label converge within brand.

Suggested Citation

  • Céline Bonnet & James Hilger & Sofia B Villas-Boas, 0. "Reduced form evidence on belief updating under asymmetric information—consumers’ response to wine expert opinions," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(5), pages 1668-1696.
  • Handle: RePEc:oup:erevae:v:47:y::i:5:p:1668-1696.
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    File URL: http://hdl.handle.net/10.1093/erae/jbz054
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    Keywords

    field experiment; labels; information; expert opinion; wine; product attributes;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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