Consumer knowledge affects valuation of product attributes: Experimental results for wine

Christopher R. Gustafson, Travis J. Lybbert, Daniel A. Sumner

Research output: Contribution to journalArticle

14 Scopus citations

Abstract

While a substantial literature on the effect of professional expertise in markets exists, consumers’ “homegrown” knowledge has received little attention in economics. We combine data from a novel valuation experiment, in which participants received information about and bid on wines sequentially, with data on participants’ wine knowledge to examine knowledge and bid updating. High knowledge participants did not value wines differently, but did update bids more with objective information, such as appellation and expert rating, than did low knowledge participants. Both low and high knowledge participants updated their bids significantly after taste-testing the wines. Our findings provide evidence that knowledge and preference are separable, and that knowledge captures a factor giving consumers the ability to process information to form expectations of product quality. Though both low and high knowledge consumers use sensory information, we find differences in preference for wines based on sensory information between low and high knowledge consumers. Our results suggest that knowledge is an important variable to consider in markets for complex, multi-attribute products.

Original languageEnglish (US)
Pages (from-to)85-94
Number of pages10
JournalJournal of Behavioral and Experimental Economics
Volume65
DOIs
StatePublished - Dec 1 2016

Keywords

  • Auctions
  • Consumer knowledge
  • Updating
  • Willingness to pay
  • Wine attributes

ASJC Scopus subject areas

  • Applied Psychology
  • Social Sciences(all)
  • Economics and Econometrics

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