The role of knowledge in choice, valuation, and outcomes for multi-attribute goods

Research output: Contribution to journalReview article

2 Citations (Scopus)

Abstract

Though the number of choices that individuals routinely must make has proliferated, comparatively little attention has been paid in the economics literature to consumer - compared to expert - knowledge, and its role in facilitating valuation and affecting choice outcomes. In this article, I review relevant work in economics, and then focus on research on knowledge that has used wine as the object of interest. Psychologists and sensory scientists have studied the role of wine expertise in sensory perception and categorization, and I review this literature to suggest how knowledge might also affect valuation and choice in the wine market. I finish by describing three recent studies on the role of knowledge in consumer valuation, information use, and choice outcomes in the American wine market. All three studies provide strong evidence that consumer knowledge is an important variable to consider in markets for differentiated products. Knowledge allows people to make greater use of objective label information when valuing wine in an experimental auction context, with high knowledge participants updating their bids more after participants received new information. In a field experiment, we find that high knowledge consumers derive greater value when selecting wines from a substantial inventory than do low knowledge consumers.

Original languageEnglish (US)
Pages (from-to)33-43
Number of pages11
JournalJournal of Agricultural and Food Industrial Organization
Volume13
Issue number1
DOIs
StatePublished - Jan 1 2015

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Wine
wines
markets
Economics
economics
auctions
expert opinion
Psychology
Consumer knowledge
Equipment and Supplies
Research
Wine market

Keywords

  • Consumer Knowledge
  • Experimental Auctions
  • Information
  • Willingness to Pay
  • Wine

ASJC Scopus subject areas

  • Food Science
  • Business, Management and Accounting(all)
  • Economics and Econometrics

Cite this

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abstract = "Though the number of choices that individuals routinely must make has proliferated, comparatively little attention has been paid in the economics literature to consumer - compared to expert - knowledge, and its role in facilitating valuation and affecting choice outcomes. In this article, I review relevant work in economics, and then focus on research on knowledge that has used wine as the object of interest. Psychologists and sensory scientists have studied the role of wine expertise in sensory perception and categorization, and I review this literature to suggest how knowledge might also affect valuation and choice in the wine market. I finish by describing three recent studies on the role of knowledge in consumer valuation, information use, and choice outcomes in the American wine market. All three studies provide strong evidence that consumer knowledge is an important variable to consider in markets for differentiated products. Knowledge allows people to make greater use of objective label information when valuing wine in an experimental auction context, with high knowledge participants updating their bids more after participants received new information. In a field experiment, we find that high knowledge consumers derive greater value when selecting wines from a substantial inventory than do low knowledge consumers.",
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AB - Though the number of choices that individuals routinely must make has proliferated, comparatively little attention has been paid in the economics literature to consumer - compared to expert - knowledge, and its role in facilitating valuation and affecting choice outcomes. In this article, I review relevant work in economics, and then focus on research on knowledge that has used wine as the object of interest. Psychologists and sensory scientists have studied the role of wine expertise in sensory perception and categorization, and I review this literature to suggest how knowledge might also affect valuation and choice in the wine market. I finish by describing three recent studies on the role of knowledge in consumer valuation, information use, and choice outcomes in the American wine market. All three studies provide strong evidence that consumer knowledge is an important variable to consider in markets for differentiated products. Knowledge allows people to make greater use of objective label information when valuing wine in an experimental auction context, with high knowledge participants updating their bids more after participants received new information. In a field experiment, we find that high knowledge consumers derive greater value when selecting wines from a substantial inventory than do low knowledge consumers.

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