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

  • Almenberg, Johan


    (Ministry of Finance)

  • Dreber, Anna



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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Paper provided by Stockholm School of Economics in its series SSE/EFI 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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  1. Roland Bénabou & Jean Tirole, 2005. "Incentives and Prosocial Behavior," NBER Working Papers 11535, National Bureau of Economic Research, Inc.
  2. 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," SSE/EFI Working Paper Series in Economics and Finance 700, Stockholm School of Economics, revised 24 Apr 2008.
  3. von Essen, Emma & Ranehill, Eva, 2011. "Dominance and Submission: Social Status Biases Economic Sanctions," SSE/EFI Working Paper Series in Economics and Finance 732, Stockholm School of Economics, revised 08 Feb 2011.
  4. Lima, Tony, 2006. "Price and Quality in the California Wine Industry: An Empirical Investigation," Journal of Wine Economics, Cambridge University Press, vol. 1(02), pages 176-190, September.
  5. 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.
  6. Hodgson, Robert T., 2008. "An Examination of Judge Reliability at a major U.S. Wine Competition," Journal of Wine Economics, Cambridge University Press, vol. 3(02), pages 105-113, December.
  7. Tore Ellingsen & Magnus Johannesson, 2008. "Pride and Prejudice: The Human Side of Incentive Theory," American Economic Review, American Economic Association, vol. 98(3), pages 990-1008, June.
  8. 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.
  9. Gerard J. Tellis & Birger Wernerfelt, 1987. "Competitive Price and Quality Under Asymmetric Information," Marketing Science, INFORMS, vol. 6(3), pages 240-253.
  10. 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.
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