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

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 wine content 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.

Publication
Journal of Wine Economics
Andreas C. Drichoutis
Andreas C. Drichoutis
Associate Professor of Consumer Behavior

My research interests are focused on, but not limited to, the economics of nutrition/obesity, contingent valuation and experimental auctions methods to elicit consumers’ valuations, choice under risk, inter-temporal decision making and applied demand analysis. Most of my research applies experimental economics methods to answer questions relevant for agricultural economists and decision scientists.