Search, Experience and Credence Goods

Transcript

the tripartite distinction of search experience and Creedon goods originally made by Philip Nelson in 1970 helps categorize different features of products or services based on when consumers are able to assess their true qualities search Goods have the kind of attributes that you can fully perceive prior to purchase that is before you enter into a ... Read More

Key Insights

• 👋 The tripartite distinction of goods into search, experience, and creedence attributes helps categorize different features of products or services.
• 👋 Search goods can be fully perceived prior to purchase and don't require relying on the seller's reputation.
• 👋 Experience goods can only be ascertained after purchase, and their quality can vary from consumer to consumer.
• 😒 Creedence goods have attributes that are difficult to ascertain, even after use.
• 👋 The law can tailor legal rules based on the attributes of goods to protect consumer interests.
• 👋 Credible advertising is crucial for search goods, while robust trademark laws build seller reputation for experience goods.
• 👋 For credence goods, the law should monitor aggregate quality to ensure safety and effectiveness.

Questions & Answers

Q: What is the difference between search, experience, and credence goods?

Search goods have qualities consumers can fully perceive before purchase, while experience goods can be assessed only after purchase through use or consumption. The quality of a credence attribute remains difficult for an individual consumer to determine even after using the product or service.

Q: What are examples of search goods?

A map of the United States and a photocopy of the Declaration of Independence are presented as search goods. A painting or chair may also predominantly have search attributes because consumers can inspect their qualities before buying.

Q: Why is seller reputation less important for search goods?

Consumers can judge the quality of a search good by inspecting the product themselves before entering a contract. When what they see is what they get, they do not need to rely as heavily on the seller’s reputation.

Q: What are examples of experience goods?

A razor blade is an experience good because a buyer learns whether it is sharp only after purchasing and using it. Laundry bleach is another example because consumers can judge its quality only after using it on their clothing.

Q: What are examples of credence goods or attributes?

An asserted light-bulb life of 10,000 hours, the claimed benefits of vitamins, and the benefits of frequent oil changes are credence attributes. An individual consumer may struggle to verify these claims even after using the products or services.

Q: Can one product have search, experience, and credence attributes?

Yes. The categories can describe different attributes of the same product rather than rigidly classifying the entire product, because its qualities may become assessable at different times.

Q: Which products or services predominantly illustrate each attribute type?

The transcript identifies clothing as predominantly having search attributes and restaurant food as predominantly having experience attributes. Legal services are described as predominantly having credence attributes.

Q: How should the law respond to search, experience, and credence attributes?

For search goods, the law should foster credible advertising so advertised products are available when consumers respond. For experience goods, robust trademark law can support seller reputation; for credence goods, authorities can audit aggregate quality, as the FDA does for pharmaceutical safety and effectiveness.

Summary & Key Takeaways

• Search goods are products with attributes that can be fully perceived before purchase, such as a map or a photocopy.

• Experience goods can only be assessed after purchase, like a razor blade or laundry bleach.

• Creedence goods have attributes that are difficult to judge even after use, such as the expected life of a light bulb or the benefits of vitamins.