Asymmetric Information in Automobile Insurance: Evidence from Driving Behavior

Publication: Scientific journalJournal articlepeer-review

Abstract

Based on a unique data set of driving behavior we test whether private information in driving characteristics has significant effects on contract choice and risk in automobile insurance. We define a driving factor based on overall distance driven, number of car rides, and speeding. Using local weather conditions, we account for the endogeneity of the driving factor. While this driving factor has an effect on risk, there is no significant evidence for selection effects in the level of third‐party liability and first‐party insurance coverage.
Original languageEnglish
Pages (from-to)969 - 995
JournalJournal of Risk and Insurance
Volume87
Issue number4
DOIs
Publication statusPublished - 2020

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 502052 Business administration
  • 502047 Economic theory
  • 502009 Corporate finance
  • 107007 Risk research
  • 101017 Game theory
  • 509015 Accident research

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