Soy candles

In economics, an experience good is a product or service where product characteristics such as quality or price are difficult to observe in advance, but these characteristics can be ascertained upon consumption. The concept is originally due to Philip Nelson, who contrasted an experience good with a search good.

Experience goods pose difficulties for consumers in accurately making consumption choices. In service areas such as healthcare, they reward reputation and create inertia. Experience goods typically have lower price elasticity than search goods, as consumers fear that lower prices may be due to unobservable problems or quality issues.

Post-experience goods, also called credence goods, are goods for which it is difficult for consumers to ascertain the quality even after they have consumed them, such as vitamin supplements. Sometimes these goods can require government regulation.

References

• Luis M. B. Cabral: Introduction to Industrial Organization, Massachusetts Institute of Technology Press, 2000, page 223. ISBN 0-262-03286-4
• Philip Nelson, “Information and Consumer Behavior”, 78(2) Journal of Political Economy 311-329 (1970).

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