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Does Advertising Bias Product Reviews? An Analysis of Wine Ratings*

Published online by Cambridge University Press:  08 June 2012

Jonathan Reuter
Jonathan Reuter
Affiliation:
Department of Finance, Carroll School of Management, Boston College, 140 Commonwealth Avenue, Chestnut Hill, MA 02467, email: reuterj@bc.edu.
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Abstract

In markets for experience goods, publications exist to help consumers decide which products to purchase. However, in most cases these publications accept advertising from the very firms whose products they review, raising the possibility that they bias product reviews to favor advertisers. To test for biased product reviews, I exploit the fact that, of the two major U.S. wine publications, only Wine Spectator accepts advertising. Although the average Wine Spectator ratings earned by advertisers and non-advertisers are similar, I find that advertisers earn just less than one point higher Wine Spectator ratings than non-advertisers when I use Wine Advocate ratings to adjust for differences in quality. However, 1 find only weak evidence that the selective retasting of advertisers' wines contributes to the higher ratings. Moreover, conditional on published ratings, Wine Spectator is no more likely to bestow awards upon advertisers. I conclude that while advertising may influence ratings on the margin, Wine Spectator appears largely to insulate reviewers from the influence of advertisers. (JEL Classification: L15, M37)

Type
Articles
Information
Journal of Wine Economics , Volume 4 , Issue 2 , Winter 2009 , pp. 125 - 151
Copyright
Copyright © American Association of Wine Economists 2009

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