Asymmetric information and learning: Evidence from the automobile insurance market

• 成果类型: Article
• 署名作者: Cohen, A
• 署名单位: Analysis Group Inc.; Harvard University; Harvard University
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/0034653053970294
• 发表日期: 2005-05
• 页码: 197-207
• 关键词: Adverse selection; equilibrium; BEHAVIOR

摘要

This paper tests the predictions of adverse-selection models using data from the automobile insurance market. I find that, in contrast to what recent research suggests, the evidence is consistent with the presence of informational asymmetries in this market: new customers choosing higher insurance coverage arc associated with more accidents. Consistent with the possibility of policyholders' learning about their risk type, such a coverage-accidents correlation exists only for policyholders with enough years of driving experience. The informational advantage that new customers with driving experience have over the insurer appears to arise in part from customers' underreporting their past claim history: policyholders switching to new insurers arc disproportionately ones with a poor claims history, and new customers tend to underreport their past claims history when joining a new insurer.