Credence Good

Back in the day, your parents listened to a band called Creedence Clearwater Revival (look them up; you have access to Google and YouTube). Most of the music was the soundtrack to The Big Lebowski. Basically: Creedence = Good.

But in finance, we drop an “e” and come to a term known as a Credence Good. We use the term when we're not sure quite how much value (better known as utility) a person receives after the use of a given product. Think: medical services. Home and auto repairs. A college education (yes, seriously). Even consulting services.

In this situation, the price is the only direct way to explain the quality of the product. So a credence good that is inexpensive is perceived by people to be of poor quality. But if someone charges a lot of money to fix a customer's car engine, the customer believes that the price signifies a higher quality service by a highly knowledgeable mechanic.