The Impact of Information on Wine Auction Prices: Results of an Experiment - Essay Example

The Impact of Information on Wine Auction Prices: Results of an Experiment I am going to base my paper on an experimental wine auction, of which four wines of high-quality got sold in four different sealed bid second-price auctions containing a secret reservation prices. It has been discovered after the auction that, for each participant, it led to a set of different socio-economic characteristics, four submitted bids for wines and four grades. “These data indicates that certain socio-economic variables like consumption habits, income and gender, are significant on the willingness of an individual to buy wine, on the other hand, the other hand nationality, and age are insignificant” (Russell 78).

These findings also endorsed experts to conclude that the degree at which individuals are willing to pay for wine depends on the information they already have about the wine.The simplest way through which consumers can be informed about the quality of wine is by the label characteristics as these provide quality indicators or go through the views of wine experts. In reality, wine labels and guides avail the buyers with most information about the quality that is correspondingly easier and better to recognize than the information they obtain by tasting the products themselves.

Thus, by tasting wine just after reading the guidelines or the label on the bottle, does not bring any extra information on wine and, therefore, does not change the consumers’ willingness pay. Conversely, reading these labels and opinions after the tasting of the product gives the buyer additional information, which they were unable to acquire through their self-evaluation, giving an explaining on the revision of individual’s willingness to pay.Works CitedRussell, Davidson. Estimations and inferences in econometrics Oxford: Oxford University Press, 1993. Print