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Home
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Working Papers
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Expert Opinion and Quality Perception of Consumers: Evidence from New York City Restaurants

Working Paper No. 108

Published: 2012
Category:
Economics

Expert Opinion and Quality Perception of Consumers: Evidence from New York City Restaurants

Olivier Gergaud, Karl Storchmann & Vincenzo Verardi
Full Text PDF
Abstract
Exploiting a natural experiment for New York City restaurants we analyze whether consumers’ quality perception is influenced by newly appearing expert opinion. As the leading restaurant guide Zagat has rated New York City’s restaurants since 1979 by drawing on consumer surveys. In 2005, with the first release of the red Michelin Guide New York City, Zagat faced a serious competition. In contrast to Zagat, Michelin relies on experts. Employing a difference-in-differences approach we analyze whether consumer assessments (Zagat ratings) have responded to Michelin quality assessments. While we do not find any significant Michelin-induced increase in perceived food quality, we find strong Michelin effects on service and décor quality. In addition, the inclusion in the Michelin guide induced substantial price increases. While restaurants that were not Michelin-reviewed can raise their prices in response to food quality improvements, service and décor improvement do not payoff. In contrast, Michelin-reviewed restaurant enjoy substantial returns only to service and décor improvement. Our results suggest that expert opinion on the New York City restaurant market exerts a negative externality on gourmets by giving restaurants incentives to invest mainly in service and décor leading to higher prices.

Submission

Please send your papers as PDF files to the editor, Victor Ginsburgh, at vginsbur@ulb.ac.be
Papers will be quickly reviewed, prior to potential posting on the website. Decision will be to post or not, possibly with short comments, but without referee reports. The decision will be based primarily on the suitability of the paper’s topic to the aims of the Association.
Such decisions are independent of publication decisions for the Journal of Wine Economics.

Working Paper publication requires that at least one author
is a regular member of AAWE.

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E-Mail: karl.storchmann@nyu.edu

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