Hollis, Aidan and Strauss, Jason (2007): Privacy, Driving Data and Automobile Insurance: An Economic Analysis.
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With new technologies that enable insurers to electronically monitor vehicles and drivers, insurers should be able to price automobile insurance more accurately, creating individualized prices for consumers. The welfare effects of lower prices are straightforward, but we also consider that consumers have heterogeneous valuations of privacy that they may lose if they adopt the monitoring technologies. We examine the voluntary market adoption of these monitoring technologies and its effect on equilibrium prices and welfare. We find a welfare effect equal to the loss in privacy, but conclude that the overall effect is ambiguous without considering moral hazard.
|Item Type:||MPRA Paper|
|Original Title:||Privacy, Driving Data and Automobile Insurance: An Economic Analysis|
|Subjects:||G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance ; Insurance Companies ; Actuarial Studies|
|Depositing User:||Jason Strauss|
|Date Deposited:||14. Oct 2008 04:48|
|Last Modified:||18. Feb 2013 16:00|
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