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Do good things come in small packages? Willingness to pay for pomegranate wine and bottle size effects

Drichoutis, Andreas C. and Klonaris, Stathis and Papoutsi, Georgia (2016): Do good things come in small packages? Willingness to pay for pomegranate wine and bottle size effects.

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Abstract

We evaluate the claim that bottle size formats signal quality changes, using a controlled laboratory experiment where we simultaneously auctioned two different sweet wines: a pomegranate wine and a grape wine. We varied on a between subjects basis the size of the bottle, from 500ml to 750ml, but kept the wine content of the bottle constant across bottle size formats. We also explored in a within subjects design the effect of expectations for the wines, blind tasting and information on willingness to pay. For the grape wine we find evidence consistent with diminishing marginal utility while for the pomegranate wine we find a premium for the smaller bottle size which is consistent with changes in perceived quality of the wine. We also find that information is adequate in offsetting the negative effect from the tasting treatment.

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