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={ERN: Consumer Behavior (Topic)}, year={2014} }
type="main"> 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 modelling 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…
272 Citations
Buying Data from Consumers: The Impact of Monitoring Programs in U.S. Auto Insurance
- Economics
- 2021
This paper studies the design and impact of auto-insurance monitoring programs, in which insurers incentivize consumers to have their driving behavior monitored for a short period of time. We acquire…
Search and Information Costs
- Economics, Business
- 2017
In many markets, consumers obtain price quotes before making purchases. In this paper, I consider a fixed-sample size model of search for price quotes when sellers must spend resources to learn the…
The Costly Quest for a Better Price - A Model of Search and Information Costs
- Economics, Business
- 2017
In many markets, consumers obtain price quotes before making purchases. This paper considers a fixed-sample size model of consumer search for price quotes when sellers must spend resources to learn…
The Costly Quest For a Better Price-A Model of Consumer Search Beyond the Supermarket
- Economics, Business
- 2017
In many markets, consumers obtain price quotes before making purchases. In this paper, I consider a fixed-sample size model of search for price quotes when sellers must spend resources to learn the…
Market frictions: A unified model of search costs and switching costs
- Economics, BusinessEuropean economic review
- 2012
Search costs and switching behaviour in the British electricity market
- Economics, Business2012 9th International Conference on the European Energy Market
- 2012
This paper investigates consumer search and pricing behaviour in the British domestic electricity market since the removal of all retail price controls in 2002. We rely on estimated search costs to…
Simultaneous or Sequential? Search Strategies in the U.S. Auto Insurance Industry
- Political ScienceMark. Sci.
- 2017
This article may be used only for the purposes of research, teaching, and/or private study and neither constitutes nor implies a guarantee, endorsement, or support of claims made of that product, publication, or service.
Consumer Search and Prices in the Automobile Market
- Economics, Business
- 2015
In many markets consumers have imperfect information about the utility they derive from the products that are on offer and need to visit stores to find the product that is the most preferred. This…
Commitment Versus Flexibility and Sticky Prices: Evidence from Life Insurance
- Economics
- 2019
Life insurance premiums display significant rigidity in the data, on average adjusting once every 3 years by more than 10%. This contrasts with the underlying marginal cost which exhibits…
Measuring the effects of search costs on equilibrium prices and profits
- Economics, BusinessInternational Journal of Industrial Organization
- 2018
References
SHOWING 1-10 OF 82 REFERENCES
Search Costs, Switching Costs and Product Heterogeneity in an Insurance Market
- Economics
- 1991
Search Costs, Switching Costs and Product Heterogeneity in an Insurance Market Abstract An insurance market is modeled as a game with two types of players: incumbent insurers and new entrants.…
Market frictions: A unified model of search costs and switching costs
- Economics, BusinessEuropean economic review
- 2012
Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade
- Business, Economics
- 1992
We survey recent work on competition in markets in which consumers have costs of switching between competing firms' products. In a market with switching costs (or "brand loyalty"), a firm's current…
Market Frictions: A Unified Model of Search and Switching Costs
- Economics
- 2009
Despite the existence of two vast literatures, very little is known about the potential differences or interactions between search and switching costs. This paper demonstrates the benefits of…
A Dynamic Model of the Transmission of Price Information in Auto Insurance Markets
- Economics
- 1989
A Dynamic Model of the Transmission of Price Information in Auto Insurance Markets Abstract A model of the demand structure of auto insurance markets is constructed in which consumers learn about…
Evidence on Adverse Selection: Equilibrium Signaling and Cross-Subsidization in the Insurance Market
- EconomicsJournal of Political Economy
- 1994
The configuration of equilibrium in the market for automobile collision insurance is examined empirically by representing the premium-deductible menu and the demand function as a standard hedonic…
Price Dispersion in an Automobile Insurance Market
- BusinessJournal of Political Economy
- 1986
From automobile insurance data for Alberta over the period 1974-81, we find thatpremiums are highly correlated across driver classes in a given year, but that premiums for a given driver class are…
Estimating Demand in Search Markets: The Case of Online Hotel Bookings
- Economics
- 2009
In this paper, we emphasize that choice sets generated by a search process have two properties: first, they are limited; second, they are endogenous to preferences. Both factors lead to biased…
Tenure Dependence in Consumer-Firm Relationships: An Empirical Analysis of Consumer Departures from Automobile Insurance Firms
- Business, Economics
- 2005
A typical pattern in markets featuring long-term consumer-firm relationships is for departure probabilities to decline with tenure. A crucial question is whether this actually implies increasing…
Services as Experience Goods: An Empirical Examination of Consumer Learning in Automobile Insurance
- Business
- 2005
accurate is information at initial purchase? How rapidly do consumers learn from product experiences? And how much impact does learning have on purchase decisions? I answer these questions for the…