Prices Change

Price changes way people experience wine, study finds

Stefan Gustafsson

BY LISA TREI

In what will be music to the ears of marketers, the old adage that you get what you pay for really is true when it comes to that most ephemeral of products: bottled wine.

According to researchers at the Stanford Graduate School of Business and the California Institute of Technology, if a person is told he or she is tasting two different wines—and that one costs $5 and the other $45 when they are, in fact, the same wine—the part of the brain that experiences pleasure will become more active when the drinker thinks he or she is enjoying the more expensive vintage.

"What we document is that price is not just about inferences of quality, but it can actually affect real quality," said Baba Shiv, a professor of marketing who co-authored a paper titled "Marketing Actions Can Modulate Neural Representations of Experienced Pleasantness," published online Jan. 14 in theProceedings of the National Academy of Sciences. "So, in essence, [price] is changing people's experiences with a product and, therefore, the outcomes from consuming this product."

Shiv, an expert in how emotion affects decision-making, used functional magnetic resonance imaging (fMRI) to conduct the study with co-authors Hilke Plassmann, a former Stanford postdoctoral researcher; Antonio Rangel, a former Stanford economist; and psychologist John O'Doherty. (Both Plassmann and Rangel are now at Caltech.) Although researchers have used fMRI scans in recent years to gauge brain activity, the study is one of the first to test subjects as they swallow liquid—in this case, wine—through a pump attached to their mouths, a tricky complication because the scanner requires people to lie very still as it measures blood flow in the brain.

According to Shiv, a basic assumption in economics is that a person's "experienced pleasantness" (EP) from consuming a product depends only on its intrinsic properties and the individual's thirst. However, marketers try to influence this experience by changing a drink's external properties, such as its price. "This type of influence is valuable for companies, because EP serves as a learning signal that is used by the brain to guide future choices," the paper says. Contrary to this basic assumption, several studies have shown that marketing can influence how people value goods. For example, Shiv has shown that people who paid a higher price for an energy drink, such as Red Bull, were able to solve more brain teasers than those who paid a discounted price for the same product.

Despite the pervasive influence of marketing, very little is known about how neural mechanisms affect decision-making, the researchers said. "Here, we propose a mechanism though which marketing actions can affect decision-making," they write. "We hypothesized that changes in the price of a product can influence neural computations associated with EP." Because perceptions about quality are positively correlated with price, the scholars argued that someone might expect an expensive wine to taste better than a cheaper one. Their hypothesis went further, stipulating that a person's anticipated experience would prompt higher activity in the part of the brain that experiences pleasure, the medial orbitofrontal cortex, or mOFC, in the forehead.

Shiv, a native of India, said he decided to study wine because so many people, especially in the Golden State, are crazy about it. "I'm just fascinated with wine," he said. "It has always amused me how much time and effort people put into this hobby. I couldn't understand it until I moved to California and started appreciating the whole thing. But, in the back of my mind, the price variation in wines

...