Quantifying Search and Switching Costs in the U.S. Auto Insurance Industry

@article{Honka2014QuantifyingSA,
  title={Quantifying Search and Switching Costs in the U.S. Auto Insurance Industry},
  author={Elisabeth Honka},
  journal={Microeconomics: Search; Learning; Information Costs & Specific Knowledge; Expectation & Speculation eJournal},
  year={2014}
}
  • Elisabeth Honka
  • Published 2014
  • Economics
  • Microeconomics: Search; Learning; Information Costs & Specific Knowledge; Expectation & Speculation eJournal
  • I estimate demand for auto insurance in the presence of two types of market frictions: search and switching costs. I develop an integrated utility-maximizing model in which consumers decide over which and how many companies to search and from which company to purchase. My modeling approach rationalizes observed consideration sets as being the outcomes of consumers’ search processes. I find search costs to range from $35 to $170 and average switching costs of $40. Search costs are the most… CONTINUE READING

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