Related Experiment Video
Updated: Feb 4, 2026

Blue-hazard-free Candlelight OLED
Published on: March 19, 2017
Advantageous Selection, Moral Hazard, and Insurer Sorting on Risk in the U.S. Automobile Insurance Market
Frank A Sloan1, Patricia A Robinson1, Lindsey M Eldred1
1213 Social Sciences Building, Box 90097, Durham, NC 27708.
Abstract:
This study quantifies the role of private information in automobile insurance policy choice using data on subjective beliefs, risk preference, reckless driving, the respondent's insurer and insurance policy characteristics merged with insurer-specific quality ratings distributed by independent organizations. We find a zero correlation between ex post accident risk and insurance coverage, reflecting advantageous selection in policy choice offset by moral hazard. Advantageous selection is partly attributable to insurer sorting on consumer attributes known and used by insurers. Our analysis of insurer sorting reveals that lower-risk drivers on attributes observed by insurers obtain coverage from insurers with higher-quality ratings.
Related Concept Videos
Design Example: Automobile Ignition System
One can generate a large voltage using a car battery of 12 volts with the help of inductors. Inductors are known for opposing...
Hazard Rate
Hazard Ratio
For example, in a clinical trial...
Kohlberg's Theory of Moral Development
Pre-Conventional Level
At the pre-conventional level, morality is primarily driven by personal...
Relative Risk
What is Natural Selection?

