Tuesday, January 15, 2008

Study: $90 wine tastes better than the same wine at $10 | Underexposed - CNET News.com

Well, score another one for behavioral finance. Classic economics would suggest that the price should not influence taste. But in a wierd twist (possibly a signaling story?) researchers now say that people sense (literally) that the tasts is better for more expensive wines eve when the wine is identical.

Study: $90 wine tastes better than the same wine at $10 | Underexposed - CNET News.com:
"...researchers found that with the higher priced wines, more blood and oxygen is sent to a part of the brain called the medial orbitofrontal cortex, whose activity reflects pleasure. Brain scanning using a method called functional magnetic resonance imaging (FMRI) showed evidence for the researchers' hypothesis that 'changes in the price of a product can influence neural computations associated with experienced pleasantness"

While touted as a marketing piece, the same logic might apply to buying stocks that so-called experts believe to be be "good".

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