Hostname: page-component-78c5997874-ndw9j Total loading time: 0 Render date: 2024-11-08T05:18:19.177Z Has data issue: false hasContentIssue false
  • English
  • Français

Do Good Things Come in Small Packages? Bottle Size Effects on Willingness to Pay for Pomegranate Wine and Grape Wine*

Published online by Cambridge University Press:  19 May 2017

Andreas C. Drichoutis ,
Stathis Klonaris  and
Georgia S. Papoutsi
Andreas C. Drichoutis*
Affiliation:
Department of Agricultural Economics & Rural Development, Agricultural University of Athens, Iera Odos 75, 11855, Athens, Greece
Stathis Klonaris
Affiliation:
Department of Agricultural Economics & Rural Development, Agricultural University of Athens, Iera Odos 75, 11855, Athens, Greece; e-mail: [email protected].
Georgia S. Papoutsi
Affiliation:
Department of Agricultural Economics & Rural Development, Agricultural University of Athens, Iera Odos 75, 11855, Athens, Greece; e-mail: [email protected].
*
e-mail: [email protected] (corresponding author)
Get access Rights & Permissions [Opens in a new window]

Abstract

We evaluate the claim that bottle size formats signal quality changes by performing a controlled laboratory experiment in which we simultaneously auction two different sweet wines: a pomegranate wine and a grape wine. We vary the size of the bottle from 500 mL to 750 mL between participants, but we keep the amount of wine constant across the bottle sizes. We also explore the effect of expectations for the wines, blind tasting, and information about wine attributes on people's willingness to pay (WTP). For both wines, we find evidence consistent with diminishing marginal utility; for the pomegranate wine, we find a premium for the smaller bottle size, which is consistent with changes in the wine's perceived quality. We also find that information is adequate in offsetting the negative effect of the tasting treatment. (JEL Classifications: C23, C24, C91, D12, M31)

Keywords

bottle size effectlaboratory experimentsecond price auctionsensory analysiswillingness to pay
Type
Articles
Information
Journal of Wine Economics , Volume 12 , Issue 1 , February 2017 , pp. 84 - 104
Copyright
Copyright © American Association of Wine Economists 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

We would like to thank the Editor and an anonymous reviewer for valuable suggestions. We would also like to thank Angelos Lagoudakis, Varvara Kechagia, Markella Bakalarou, Giorgos Koutsaftakis, and Dafni Papapanagiotou for excellent research assistance. Data collection was financially supported by the municipality of Athens through the grant Innovation and Entrepreneurship – Valorization of Research by the Agricultural University of Athens (Reference no 464052).

References

Allison, R.I., and Uhl, K.P. (1964). Influence of beer brand identification on taste perception. Journal of Marketing Research, 1(3), 36–39.Google Scholar
Bagwell, K., and Riordan, M.H. (1991). High and declining prices signal product quality. American Economic Review, 81(1), 224–239.Google Scholar
Banerji, A., and Gupta, N. (2014). Detection, identification, and estimation of loss aversion: Evidence from an auction experiment. American Economic Journal: Microeconomics, 6(1), 91–133.Google Scholar
Bazoche, P., Deola, C., and Soler, L.-G. (2008). An experimental study of wine consumers’ willingness to pay for environmental characteristics. 12th Congress of the European Association of Agricultural Economists, August 26–29, Ghent, Belgium.Google Scholar
Boudreaux, C.A., and Palmer, S.E. (2007). A charming little Cabernet: Effects of wine label design on purchase intent and brand personality. International Journal of Wine Business Research, 19(3), 170–186.Google Scholar
Brunke, H., Thiemann, F., Mueller, R., and Albrechts, C. (2009). Odd prices for odd bottles at VDP auctions? Paper presented at Enometrics XVI Conference of the Vineyard Data Quantification Society, May 20–23, Namur, Belgium.Google Scholar
Charness, G., Gneezy, U., and Kuhn, M.A. (2012). Experimental methods: Between-subject and within-subject design. Journal of Economic Behavior and Organization, 81(1), 1–8.CrossRefGoogle Scholar
Combris, P., Bazoche, P., Giraud-Hraud, E., and Issanchou, S. (2009). Food choices: What do we learn from combining sensory and economic experiments? Food Quality and Preference, 20(8), 550–557.Google Scholar
Corgnet, B., Hernán-González, R., Kujal;, P. and Porter, D. (2014). The effect of earned versus house money on price bubble formation in experimental asset markets. Review of Finance, 19(4), 1455–1488.Google Scholar
Corrigan, J.R., Drichoutis, A.C., Lusk, J.L., Nayga, J.R.M., and Rousu, M.C. (2012). Repeated rounds with price feedback in experimental auction valuation: An adversarial collaboration. American Journal of Agricultural Economics, 94(1), 97–115.CrossRefGoogle Scholar
Deaton, A., and Cartwright, N. (2016). Understanding and misunderstanding randomized controlled trials. National Bureau of Economic Research Working Paper No. 22595.Google Scholar
de Mello, L., and Pires, R. (2009). Message on the bottle: Colours and shapes of wine labels. American Association of Wine Economics Working Paper No. 42.Google Scholar
Fischbacher, U. (2007). z-tree: Zurich toolbox for ready-made economic experiments. Experimental Economics 10(2), 171–178.Google Scholar
Friedman, M. (1937). The use of ranks to avoid the assumption of normality implicit in the analysis of variance. Journal of the American Statistical Association, 32(200), 675–701.CrossRefGoogle Scholar
Friedman, M. (1939). A correction: The use of ranks to avoid the assumption of normality implicit in the analysis of variance. Journal of the American Statistical Association, 34(205), 109.Google Scholar
Goldstein, R., Almenberg, J., Dreber, A., Emerson, J.W., Herschkowitsch, A., and Katz, J. (2008). Do more expensive wines taste better? Evidence from a large sample of blind tastings. Journal of Wine Economics 3, 1–9.Google Scholar
Granato, D., Katayama, F.C.U., and de Castro, I.A. (2011). Phenolic composition of South American red wines classified according to their antioxidant activity, retail price and sensory quality. Food Chemistry, 129(2), 366–373.Google Scholar
Ho, D.E., Imai, K., King, G., and Stuart, E.A. (2007). Matching as nonparametric preprocessing for reducing model dependence in parametric causal inference. Political Analysis, 15(3), 199–236.Google Scholar
Jacquemet, N., Joule, R.-V., Luchini, S., and Shogren, J.F. (2009). Earned wealth, engaged bidders? Evidence from a second-price auction. Economics Letters, 105(1), 36–38.CrossRefGoogle Scholar
Johansson, L., Haglund, R., Berglund, L., Lea, P., and Risvik, E. (1999). Preference for tomatoes, affected by sensory attributes and information about growth conditions. Food Quality and Preference, 10(45), 289–298.Google Scholar
Kruskal, W.H., and Wallis, W.A. (1952). Use of ranks in one-criterion variance analysis. Journal of the American Statistical Association, 47(260), 583–621.Google Scholar
Lecocq, S., Magnac, T., Pichery, M.-C., and Visser, M. (2005). The impact of information on wine auction prices: Results of an experiment. Annales d'E´conomie et de Statistique 77, 37–57.Google Scholar
Lecocq, S., and Visser, M. (2006). What determines wine prices: Objective vs. sensory characteristics. Journal of Wine Economics, 1(1), 42–56.Google Scholar
Lesschaeve, I. (2007). Sensory evaluation of wine and commercial realities: Review of current practices and perspectives. American Journal of Enology and Viticulture, 58(2), 252–258.Google Scholar
Lusk, J.L., and Shogren, J.F. (2007). Experimental auctions, methods and applications in economic and marketing research. Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Mathur, S., and Qiu, C. (2012). Single package size as a signal of quality: Theory and evidence. Working paper available at http://ssrn.com/abstract=1799703.Google Scholar
Mood, A.M. (1954). On the asymptotic efficiency of certain nonparametric two-sample tests. Annals of Mathematical Statistics, 25(3), 514–522.Google Scholar
Mutz, D.C., and Pemantle, R. (2015). Standards for experimental research: Encouraging a better understanding of experimental methods. Journal of Experimental Political Science, 2(2), 192–215.CrossRefGoogle Scholar
Outreville, J.F. (2011). Does the bottle size matter? An investigation into differences between posted and market price. American Association of Wine Economics Working Paper No. 86.Google Scholar
Rao, A.R., and Monroe, K.B. (1989). The effect of price, brand name, and store name on buyers’ perceptions of product quality: An integrative review. Journal of Marketing Research, 26(3), 351–357.Google Scholar
Rivard, D. (2009). The ultimate fruit winemaker's guide. Bacchus Enterprises Ltd.Google Scholar
Rosato, A., and Tymula, A.A. (2016). Loss aversion and competition in Vickrey auctions: Money ain't no good. University of Sydney, Economics Working Paper Series 2016-09.Google Scholar
Schneider, D. (July 20, 2007). Ripe time for fruit wine. San Francisco Chronicle. Available at http://www.sfgate.com/wine/article/RIPE-TIME-FOR-FRUIT-WINE-2551791.php. Accessed on March 4, 2017.Google Scholar
Shiv, B., Carmon, Z., and Ariely, D. (2005). Placebo effects of marketing actions: Consumers may get what they pay for. Journal of Marketing Research, 42(4), 383–393.Google Scholar
Shogren, J.F., Margolis, M., Koo;, C. and List, J.A. (2001). A random nth-price auction. Journal of Economic Behavior and Organization, 46(4), 409–421.Google Scholar
Shreay, S., Chouinard, H.H., and McCluskey, J.J. (2016). Product differentiation by package size. Agribusiness, 32(1), 3–15.Google Scholar
Siegrist, M., and Cousin, M.-E. (2009). Expectations influence sensory experience in a wine tasting. Appetite, 52(3), 762–765.Google Scholar
Stone, H., and Sidel, J.L. (2004). Sensory evaluation practices. San Diego, CA: Elsevier Academic Press.Google Scholar
Thomas, A. (2000). Elements influencing wine purchasing: A New Zealand view. International Journal of Wine Marketing, 12(2), 47–62.Google Scholar
Toussaint-Samat, M. (2009). A history of food. (2nd ed.). Chichester, UK: John Wiley and Sons.Google Scholar
Vecchio, R. (2013). Determinants of willingness-to-pay for sustainable wine: Evidence from experimental auctions. Wine Economics and Policy, 2(2), 85–92.Google Scholar
Vickrey, W. (1961). Counterspeculation, auctions, and competitive sealed tenders. Journal of Finance, 16(1), 8–37.CrossRefGoogle Scholar
Wine America. (2012). Wine comes from … crabapples, pineapples and other adventures. Available at http://wineamerica.org/news/wine-comes-from. Accessed on March 4, 2017.Google Scholar
Yan, D., Sengupta, J., and Wyer, R.S. Jr. (2014). Package size and perceived quality: The intervening role of unit price perceptions. Journal of Consumer Psychology, 24(1), 4–17.Google Scholar
Supplementary material: PDF

Drichoutis supplementary material

Drichoutis supplementary material

Download Drichoutis supplementary material(PDF)
PDF 3 MB