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The impact of information on wine auction prices: results of an experiment

Author

Listed:
  • Sébastien Lecocq
  • Thierry Magnac
  • Marie-Claude Pichery
  • Michael Visser

Abstract

This paper reports the results of an experimental wine auction. Participants of the experiment were randomly assigned to three rooms. In each room four wines had to be evaluated, but the level of information to which participants had access differed across rooms. After the evaluations, the wines were sold sequentially, by four separate Vickrey auctions with secret reservation prices. We find that certain socio-economic characteristics such as gender, income and consumption habits, have a significant impact on the willingness to pay for wine, while others such as age and nationality, do not. We also find that once individuals have read the label characteristics and extracts from wine guides, the taste of the wines does not have an additional impact on willingness to pay. Conversely, if individuals who have only tasted the wines blindly are informed about the wine characteristics and opinions from experts, their willingness to pay increases substantially.

Suggested Citation

  • Sébastien Lecocq & Thierry Magnac & Marie-Claude Pichery & Michael Visser, 2005. "The impact of information on wine auction prices: results of an experiment," Annals of Economics and Statistics, GENES, issue 77, pages 37-57.
    • Handle: RePEc:adr:anecst:y:2005:i:77:p:37-57
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    File URL: http://www.jstor.org/stable/20079115
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    Cited by:

    1. Bazoche, P. & Deola, C. & Soler, Louis-Georges, 2008. "An experimental study of wine consumers’ willingness to pay for environmental characteristics," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43651, European Association of Agricultural Economists.
    2. Boom, Anette, 2004. ""Download for Free" - When Do Providers of Digital Goods Offer Free Samples?," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 70, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    3. Todd M. Schmit & Bradley J. Rickard & John Taber, 2013. "Consumer Valuation of Environmentally Friendly Production Practices in Wines, considering Asymmetric Information and Sensory Effects," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(2), pages 483-504, June.
    4. Chauvin, Pierre-Marie, 2013. "The social fabric of prices: Institutional factors and reputation work in the bordeaux wine futures campaign," economic sociology. perspectives and conversations, Max Planck Institute for the Study of Societies, vol. 15(1), pages 12-21.
    5. Andreas C. Drichoutis & Stathis Klonaris & Georgia Papoutsi, 2016. "Do good things come in small packages? Willingness to pay for pomegranate wine and bottle size effects," Working Papers 2016-2, Agricultural University of Athens, Department Of Agricultural Economics.
    6. Azucena GRACIA & Tiziana DE-MAGISTRIS, 2015. "The role of participants' competitiveness in consumers' valuation for food products using experimental auctions," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(10), pages 484-491.

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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