VERTICAL DIFFERENTIATION, PERCEPTIONS RESTRUCTURING, AND WINE CHOICES: THE CASE OF THE GRAN SELEZIONE IN CHIANTI WINES
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We conduct a choice experiment where the number of labels vertically differentiating Chianti
wines (Chianti, Chianti Classico, Chianti Classico Riserva, Chianti Classico Gran Selezione) is
augmented incrementally in a between-subject design, eliciting both quality perceptions and
wine choices. We find that quality expectations are endogenous to the labeling regime, and
adding a high-quality label (e.g., Chianti Gran Selezione) decreases the perceived quality of all
other Chianti wines (comparative stigma). A model conditioning on subjective quality
perceptions with heterogeneous WTP for quality is then proposed, and estimated via random
parameter multinomial logit. The endogeneity problem arising from using subjective beliefs as
regressors is addressed by means of a control-function approach. Results are compared to
reduced form approaches where the marginal utility of quality and subjective perceptions are
confounded in a single label-specific estimate, and the model is used to determine how much of
the cannibalization observed after introducing higher-tier quality standards is attributable to
restructuring of perceptions and comparative stigma.