IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Anchored in the past: Persistent price effects of obsolete vineyard ratings in France

Listed author(s):
  • Gergaud, Olivier
  • Plantinga, Andrew J.
  • Ringeval-Deluze, Aurelie
Registered author(s):

    Although abundant evidence for anchoring in economic valuations has been produced in experimental settings, there have been relatively few studies testing for anchoring in actual markets. We analyze data on grape and vineyard prices in the Champagne region of France to determine whether current prices are anchored on past prices set under a discontinued price-setting system. The key feature of this system is a vineyard quality rating called the Echelle Des Crus (EDC). The econometric challenge is to separately identify anchoring effects from the effects of relevant information EDC era prices may convey about grape and vineyard quality. Our empirical approach controls for observable attributes of vineyards and time-invariant unobserved determinants of vineyard quality that may be revealed to market participants through EDC era prices. In addition, we use an instrumental variables strategy to mitigate confounding influences of time-varying unobservables. We find strong evidence that anchoring has large effects on prices for grapes and vineyards. We also examine whether the anchoring effect is diminishing over time as market participants come to rely more on objective information to determine prices. We find, instead, a persistent effect of the EDC many years after it became obsolete.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268116302207
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

    Volume (Year): 133 (2017)
    Issue (Month): C ()
    Pages: 39-51

    as
    in new window

    Handle: RePEc:eee:jeborg:v:133:y:2017:i:c:p:39-51
    DOI: 10.1016/j.jebo.2016.10.005
    Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as
    in new window


    1. Orley Ashenfelter & Karl Storchmann, 2010. "Using Hedonic Models of Solar Radiation and Weather to Assess the Economic Effect of Climate Change: The Case of Mosel Valley Vineyards," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 333-349, May.
    2. Gergaud, Olivier & Ginsburgh, Victor, 2010. "Natural Endowments, Production Technologies and the Quality of Wines in Bordeaux. Does Terroir Matter?," Journal of Wine Economics, Cambridge University Press, vol. 5(01), pages 3-21, March.
    3. McAlvanah, Patrick & Moul, Charles C., 2013. "The house doesn’t always win: Evidence of anchoring among Australian bookies," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 87-99.
    4. Alan Beggs & Kathryn Graddy, 2009. "Anchoring Effects: Evidence from Art Auctions," American Economic Review, American Economic Association, vol. 99(3), pages 1027-1039, June.
    5. David Menival & Steve Charters, 2014. "The impact of geographic reputation on the value created in Champagne," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(2), pages 171-184, 04.
    6. Sheharyar Bokhari & David Geltner, 2011. "Loss Aversion and Anchoring in Commercial Real Estate Pricing: Empirical Evidence and Price Index Implications," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 39(4), pages 635-670, December.
    7. Herriges, Joseph A. & Shogren, Jason F., 1996. "Starting Point Bias in Dichotomous Choice Valuation with Follow-Up Questioning," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 112-131, January.
    8. Robin Cross & Andrew J. Plantinga & Robert N. Stavins, 2011. "What Is the Value of Terroir?," American Economic Review, American Economic Association, vol. 101(3), pages 152-156, May.
    9. Allen Klaiber, H. & Phaneuf, Daniel J., 2010. "Valuing open space in a residential sorting model of the Twin Cities," Journal of Environmental Economics and Management, Elsevier, vol. 60(2), pages 57-77, September.
    10. Bucchianeri, Grace W. & Minson, Julia A., 2013. "A homeowner's dilemma: Anchoring in residential real estate transactions," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 76-92.
    11. Kevin J. Boyle & Richard C. Bishop & Michael P. Welsh, 1985. "Starting Point Bias in Contingent Valuation Bidding Games," Land Economics, University of Wisconsin Press, vol. 62(2), pages 188-194.
    12. Northcraft, Gregory B. & Neale, Margaret A., 1987. "Experts, amateurs, and real estate: An anchoring-and-adjustment perspective on property pricing decisions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 39(1), pages 84-97, February.
    13. Jonathan E. Alevy & Craig E. Landry & John A. List, 2011. "Field Experiments on Anchoring of Economic Valuations," Working Papers 2011-02, University of Alaska Anchorage, Department of Economics.
    14. Dan Ariely & George Loewenstein & Drazen Prelec, 2003. ""Coherent Arbitrariness": Stable Demand Curves Without Stable Preferences," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 73-106.
    15. Furnham, Adrian & Boo, Hua Chu, 2011. "A literature review of the anchoring effect," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(1), pages 35-42, February.
    16. Jonathan E. Alevy & Craig E. Landry & John A. List, 2015. "Field Experiments On The Anchoring Of Economic Valuations," Economic Inquiry, Western Economic Association International, vol. 53(3), pages 1522-1538, 07.
    17. Olivier Gergaud, 1998. "Estimation d'une fonction de prix hédonistiques pour le vin de Champagne," Économie et Prévision, Programme National Persée, vol. 136(5), pages 93-105.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:133:y:2017:i:c:p:39-51. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.