Expert Opinion and the Demand for Experience Goods: An Experimental Approach

Abstract

Expert Opinion and the Demand for Experience Goods: An Experimental Approach in the Retail Wine Market James Hilger, Greg Rafert, Soa Villas-Boas ∗ January 28, 2010 Abstract The eect of expert opinion on consumer demand for experience goods is dicult to quantify, as the relationship between purchases and reviews may be driven by product quality. Further, it is unclear whether a review-based demand eect is due to the provision of quality or existence information. Uti- lizing a eld experiment in the retail wine market to overcome these obstacles, we nd that there is a signicant positive average consumer response to expert opinion labels for wine. We nd that while demand decreases for wines that receive low scores, demand for average- and higher-than-average-scored wines increases. The results indicate that expert opinion labels transmit quality in- formation that aects demand as opposed to solely increasing the wine's shelf visibility to the consumer. Hilger: U.S. National Marine Fisheries Service; Rafert: Analysis Group; and Villas-Boas: De- partment of Agricultural and Resource Economics, University of California at Berkeley. We thank the editor Julio Rotemberg, two anonymous referees, as well as Max Auhammer, Peter Berck, Stefano DellaVigna, Christopher Gustafson, Daniel Hosken, John List, Jeremy Magruder, Doug Miller, Carlo Prato, David Schmidt, Stephen Stohs, Elizabeth Szyleyko, Miguel Villas-Boas, semi- nar participants at the University of California at Davis, the 35th EARIE Conference in Toulouse, and the FTC & Northwestern University Microeconomics Conference for helpful comments. We are also thankful to Michelle Scizak, Reed Johnson, and Steve Flaming for help with the data; Will Liu and Je Coronado for help with the experimental implementation; Kyle Birchard, Elizabeta Perova, Grant Chen, Patricia Javier, Katan Patel, and Elizabeth Creed for their excellent research assistance. The authors gratefully acknowledge the nancial support received from the Giannini Foundation. The results are not necessarily those of the U.S. National Marine Fisheries Service. Corresponding author: J. Hilger at james.hilger@noaa.gov.