Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industry

TY - UNPB

T1 - Globalization, Superstars, and the Importance of Reputation

T2 - Theory & Evidence from the Wine Industry

AU - Gibbs, Michael

AU - Tapia, Mikel

AU - Warzynski, Frederic

PY - 2009

Y1 - 2009

N2 - 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.

AB - 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.

M3 - Working paper

SN - 9788778824189

BT - Globalization, Superstars, and the Importance of Reputation

PB - Aarhus School of Business

CY - Aarhus

ER -