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When Does the Price Affect the Taste? Results from a Wine Experiment

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Author Info

  • Almenberg, Johan

    () (Ministry of Finance)

  • Dreber, Anna

    () (SIFR)

Abstract

We designed an experiment that examines how knowledge about the price of a good, and the time at which the information is received, affects how the good is experienced. The good in question was wine, and the price was either high or low. Our results suggest that hosts offering wine to guests can safely reveal the price: much is gained if the wine is expensive, and little is lost if it is cheap. Disclosing the high price before tasting the wine produces considerably higher ratings, although only from women. Disclosing the low price, by contrast, does not result in lower ratings. Our finding supports the notion that price not only serves to clear markets, it also serves as a marketing tool; it influences expectations that in turn shape a consumer’s experience. In addition, our results suggest that men and women respond differently to attribute information concerning wine.

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Bibliographic Info

Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 717.

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Length: 16 pages
Date of creation: 19 Apr 2009
Date of revision: 20 Apr 2009
Handle: RePEc:hhs:hastef:0717

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Related research

Keywords: Price-Quality Heuristic; Attribute Information; Role of Expectations; Marketing; Blind Tasting; Wine.;

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References

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  1. Goldstein, Robin & Almenberg, Johan & Dreber, Anna & Emerson, John W. & Herschkowitsch, Alexis & Katz, Jacob, 2008. "Do More Expensive Wines Taste Better? Evidence from a Large Sample of Blind Tastings," Working Paper Series in Economics and Finance 700, Stockholm School of Economics, revised 24 Apr 2008.
  2. Ellingsen, Tore & Johannesson, Magnus, 2006. "Pride and Prejudice: The Human Side of Incentive Theory," CEPR Discussion Papers 5768, C.E.P.R. Discussion Papers.
  3. von Essen, Emma & Ranehill, Eva, 2011. "Dominance and Submission: Social Status Biases Economic Sanctions," Working Paper Series in Economics and Finance 732, Stockholm School of Economics, revised 08 Feb 2011.
  4. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March.
  5. Hoch, Stephen J & Ha, Young-Won, 1986. " Consumer Learning: Advertising and the Ambiguity of Product Experience," Journal of Consumer Research, University of Chicago Press, vol. 13(2), pages 221-33, September.
  6. Gerard J. Tellis & Birger Wernerfelt, 1987. "Competitive Price and Quality Under Asymmetric Information," Marketing Science, INFORMS, vol. 6(3), pages 240-253.
  7. Levin, Irwin P & Gaeth, Gary J, 1988. " How Consumers Are Affected by the Framing of Attribute Information before and after Consuming the Product," Journal of Consumer Research, University of Chicago Press, vol. 15(3), pages 374-78, December.
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Cited by:
  1. Rössel, Jörg & Beckert, Jens, 2012. "Quality classifications in competition: Price formation in the German wine market," MPIfG Discussion Paper 12/3, Max Planck Institute for the Study of Societies.

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