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Welfare Implications of Proprietary Data Collection: An Application to Telematics in Auto Insurance

Author

Listed:
  • Imke Reimers

    (Northeastern University)

  • Benjamin R. Shiller

    (Brandeis University)

Abstract

Concerns about anti-competitive effects of proprietary data collection have motivated recent European data portability laws. We investigate such concerns and search for evidence of direct benefits of data collection in the context of Pay How You Drive (PHYD) auto insurance, which offers tailored discounts to drivers monitored by telematics devices. We exploit the staggered entry of PHYD insurance across states and insurers in a difference-in-differences framework, and we replicate the main findings using state insurance regulations as instruments for entry timing. We find a meaningful impact of PHYD programs on fatal accidents, but we find no evidence of antitrust concerns.

Suggested Citation

  • Imke Reimers & Benjamin R. Shiller, 2018. "Welfare Implications of Proprietary Data Collection: An Application to Telematics in Auto Insurance," Working Papers 119R, Brandeis University, Department of Economics and International Business School, revised May 2018.
    • Handle: RePEc:brd:wpaper:119r
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    File URL: http://www.brandeis.edu/economics/RePEc/brd/doc/Brandeis_WP119R.pdf
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    References listed on IDEAS

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    Cited by:

    1. Martin Eling & Irina Gemmo & Danjela Guxha & Hato Schmeiser, 2024. "Big data, risk classification, and privacy in insurance markets," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 49(1), pages 75-126, March.
    2. O’Connor, Jason & Wilson, Nathan E., 2021. "Reduced demand uncertainty and the sustainability of collusion: How AI could affect competition," Information Economics and Policy, Elsevier, vol. 54(C).
    3. Ehsan Valavi & Joel Hestness & Newsha Ardalani & Marco Iansiti, 2022. "Time and the Value of Data," Papers 2203.09118, arXiv.org.
    4. Calvano, Emilio & Polo, Michele, 2021. "Market power, competition and innovation in digital markets: A survey," Information Economics and Policy, Elsevier, vol. 54(C).

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    More about this item

    Keywords

    Proprietary data; data portability; oligopoly; economic competition; asymmetric information;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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