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AN OBJECTIVE MEASURE OF SEARCH VERSUS EXPERIENCE GOODS
Author(s) -
LABAND DAVID N.
Publication year - 1991
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1991.tb00842.x
Subject(s) - ceteris paribus , vendor , economics , proxy (statistics) , product (mathematics) , goods and services , microeconomics , measure (data warehouse) , marketing , business , computer science , mathematics , geometry , database , machine learning , market economy
This paper proposes the use of product price as an empirically pliable measure of the expected benefits to consumers of acquiring information about product and vendor performance prior to purchase. As the purchase price of an item increases, so does the cost of making a disappointing purchase and, accordingly, the expected benefit from acquiring prepurchase information, ceteris paribus. A continuous price variable (a proxy for the cost of making a disappointing purchase) generates results similar to those obtained by Nelson [1970; 1974] for search versus experience goods, but can be applied to a broader range of goods and services.