Perceived risk and the willingness to buy and pay for "corked" bottles of wine

Purpose - The purpose of this paper is to examine the purchase decision of consumers when faced with a perceived risk related to a "corked" wine for different levels of price. It provides an example of a study of consumer behavior in the context of risk aversion and when a risk-reduction strategy is proposed. The empirical analysis examines the perceive risk as is a major determinant of the willingness to buy (WTB) and to pay (WTP) for corked bottles of wine. Design/methodology/approach - The experimental investigation on consumer risk perception of corked bottles of wine is based on a choice-based questionnaire distributed to 310 graduate students in Bordeaux and Dijon in France. The context is the decision to purchase or not a bottle of wine at different price levels. Assuming the monotonicity of the demand function, the choice-based questionnaire is used to determine the maximum WTB and WTP for each participant. Findings - Results demonstrate that when participants are asked simultaneously to reveal their perceived risk and purchase decision, the behavior significantly affects the WTB and WTP. At the same time, demand for risk-reduction devices (screw-caps in this study) also declines strongly with price and perceived risk. Research limitations/implications - Although the experiment was replicated in a different region and students with a different profile, it cannot be generalized to other countries or region with a different wine culture. Practical implications - The results have interesting behavior implications in the debate for screw-caps rather than corks. They confirm that screw-caps are associated with low quality, low value wines. Understanding the factors that influence consumers, wine purchase decisions are therefore important to wine producers, restaurant owners and retailers. Originality/value - This is the first study that analyzes, in the context of risk taking when buying wine, the WTB and WTP for a bottle of wine when participants are required to reveal simultaneously their perceived risk and purchase decision.