Credence good

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This article defines a property of goods: a property that makes sense in the context of a good being bought and sold, and evaluated from the perspective of the buyer, seller, or others affected by it.
View other properties of goods

History

The notion of credence good was first explored in detail in the paper Free competition and the optimal amount of fraud by Darby and Karni, published in 1973.

Definition

A credence good is a good for which it is hard for buyers to determine the total cost and benefit of the good to them even after purchase and use. More generally credence good may refer to a good whose utility or value to consumers is hard to determine.

Credence goods are sometimes called post-experience goods. They differ from experience goods, for which it is hard for buyers to ascertain cost and value prior to purchase, but easy to determine cost and value after purchase.

The problem of trying to determine the vlaue of credence goods, and understand the market mechanisms that determine prices for credence goods, is termed the credence good problem.

Examples

Diet

Health care

Further information: Credence good problem in health care

Education

References

Journal references