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

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Author Info

  • Hilger, James
  • Rafert, Greg
  • Villas-Boas, Sofia B

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. Utilizing 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 demand increases for wines scoring average or higher. Results indicate that expert opinion labels transmit quality information as opposed to solely shelf visibility.

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Bibliographic Info

Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt4nc7h417.

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Date of creation: 26 May 2011
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Handle: RePEc:cdl:agrebk:qt4nc7h417

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Related research

Keywords: Social and Behavioral Sciences; Life Sciences; Business; experimental methods; consumer behavior; wine industry;

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References

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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, 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, vol. 65(1), pages 31-50, January.
  3. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, 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 2013:6, Uppsala University, Department of Economics.
  2. Cunningham, A. Scott & Engelstätter, Benjamin & Ward, Michael R., 2011. "Understanding the effects of violent video games on violent crime," ZEW Discussion Papers 11-042, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Michela Ponzo & Vincenzo Scoppa, 2013. "Experts’ Awards and Economic Success: Evidence from an Italian Literary Prize," CSEF Working Papers 335, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

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