Gibbs, Michael (University of Chicago GSB) Tapia, Mikel (Universidad Carlos III de Madrid) Warzynski, Frederic () (Department of Economics, Aarhus School of Business)
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We develop a simple model of the effects of reputation on wine prices. An increasing fraction of consumers who are “naïve” (less well informed about wine quality) results in a stronger sensitivity of wine prices to ratings of quality. We then use data on prices and Robert Parker’s ratings of wines, to show that prices have become more related to Parker ratings over time. In addition, we find that a change in Parker rating has a stronger effect on price, the stronger is the wine’s reputation.
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Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number
09-3.
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