, Mikel Tapia
and Frederic Warzynski
Michael Gibbs: University of Chicago GSB, Postal: University of Chicago GSB
Mikel Tapia: Universidad Carlos III de Madrid, Postal: Universidad Carlos III de Madrid
Frederic Warzynski: Department of Economics, Aarhus School of Business, Postal: Frichshuset Hermodsvej 22, 8230 Åbyhøj, Denmark
Abstract: 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.
33 pages, February 9, 2009
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