TY  - UNPD
A1  - Kubitza, Christian
T1  - Do consumers benefit from more informed firms?
N2  - We study the impact of estimation errors of firms on social welfare. For this purpose, we present a model of the insurance market in which insurers face parameter uncertainty about expected loss sizes. As consumers react to under- and overestimation by increasing and decreasing demand, respectively, insurers require a safety loading for parameter uncertainty. If the safety loading is too small, less risk averse consumers benefit from less informed insurers by speculating on them underestimating expected losses. Otherwise, social welfare increases with insurers’ information. We empirically estimate safety loadings in the US property and casualty insurance market, and show that these are likely to be sufficiently large for consumers to benefit from more informed insurers.
T3  - ICIR Working Paper Series - No. 32/17 [20.08.17] 
KW  - Price Uncertainty
KW  - Parameter Uncertainty
KW  - Economics of Information
Y1  - 2017
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/77176
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-771761
PB  - International Center for Insurance Regulation
CY  - Frankfurt am Main
ER  -