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Expert Opinion and the Demand for Experience Goods: An Experimental Approach in the Retail Wine Market

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  • James Hilger

    (U.S. National Marine Fisheries Service)

  • Greg Rafert

    (Analysis Group)

  • Sofia Villas-Boas

    (University of California at Berkeley)

Abstract

The effect of expert opinion on demand for experience goods is difficult to quantify, as the relationship between purchases and reviews may be driven by product quality. Further, it is unclear whether a review-based demand effect is due to providing quality or existence information. Using a retail field experiment to overcome these obstacles, we find a significant positive average consumer response to expert opinion labels for wine. Demand decreases for low-scoring wines and increases for wines scoring average or higher. Results indicate that expert opinion labels transmit quality information as opposed to solely shelf visibility. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 93 (2011)
Issue (Month): 4 (November)
Pages: 1289-1296

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Handle: RePEc:tpr:restat:v:93:y:2011:i:4:p:1289-1296

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  1. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 84(3), pages 488-500, August.
  2. Montgomery, Cynthia A & Wernerfelt, Birger, 1992. "Risk Reduction and Umbrella Branding," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 65(1), pages 31-50, January.
  3. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 78(2), pages 311-29, March-Apr.
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Cited by:
  1. Engström, Per & Forsell, Eskil, 2013. "Demand effects of consumers’ stated and revealed preferences," Working Paper Series, Uppsala University, Department of Economics 2013:6, Uppsala University, Department of Economics.
  2. Michela Ponzo & Vincenzo Scoppa, 2013. "Experts’ Awards And Economic Success: Evidence From An Italian Literary Prize," Working Papers, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica) 201306, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).
  3. Cunningham, A. Scott & Engelstätter, Benjamin & Ward, Michael R., 2011. "Understanding the effects of violent video games on violent crime," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 11-042, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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