Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industry
University of Chicago Booth School of Business; Institute for the Study of Labor (IZA)
Universidad Carlos III de Madrid - Department of Business Administration
University of Aarhus - Department of Economics
February 14, 2009
Chicago Booth School of Business Research Paper No. 09-13
We develop a simple model of the effects of reputation on wine prices. An increasing fraction of consumers who are "naive" (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.
Number of Pages in PDF File: 20
Keywords: Reputation, Globalization, Wine
JEL Classification: L15, L66, Q11, F14
Date posted: February 15, 2009 ; Last revised: January 29, 2012
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