Scientists at Cal Tech and Stanford have discovered that wine tastes better when it is more expensive. Subjects preferred wine labeled as $90 dollars over wine that was labeled as $10, even though they were the exact same Cabernet Sauvignon. The functional magnetic resonance imaging of the subjects showed that more blood and oxygen was sent to the medial orbitofrontal cortex, which is thought to be responsible for judging the pleasantness of an experience. The study shows that the practice by marketers to increase the price of a good can affect consumers actual experiences at a physiological level. This can explain why people tend to like expensive things more and how a price premium strategy works.
Source: The Naked Scientist Podcast