tom2000
Posts: 1
Registered:
2009-04-16
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 Posted: Apr 16, 2009 4:44:12 pm |
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A credence good is a term used in economics for a good whose utility impact is difficult or impossible for the consumer to ascertain. In contrast to experience goods, the utility gain or loss of credence goods is difficult to measure after consumption as well. The seller of the good knows the utility impact of the good, creating a situation of asymmetric information. Credence goods may display a direct (rather than inverse) relationship between price and demand, similar to Veblen goods, when price is the only possible indicator of quality. The least expensive products might be avoided in order to avoid suspected fraud and poor quality.A practical application of this principle would be for competing job applicants not to propose too low a wage when asked, lest the employer think that the employee has something to hide or does not have the necessary qualification for the job.
Tom
Drug Intervention North Dakota |
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