Point-record incentives, asymmetric information and dynamic data (revised version)
Road safety policies often use incentive mechanisms based on traffic violations to promote safe driving. These mechanisms are both monetary (fines, insurance premiums) and nonmonetary (point-record driving licenses). We analyze the effectiveness of these mechanisms in promoting safe driving. We derive their theoretical properties with respect to contract time and accumulated demerit points. These properties are then tested empirically in a model which separates moral hazard from unobserved heterogeneity. We do not reject the presence of moral hazard in the Quebec public insurance regime. Moreover, we verify that the experience rating introduced in 1992 did reduce the frequency of traffic violations by 15%. Lastly, we compare the effectiveness of the different incentive schemes and we derive monetary equivalents for traffic violations and license suspensions.
|Date of creation:||Jul 2008|
|Note:||View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00331180|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:hal-00331180. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.