Researchers’ Work from California Institute of Technology (Caltech) Focuses on Economics (Competing Under Information Heterogeneity: Evidence From Auto Insurance): Economics

2026 JUL 23 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Research findings on Economics are discussed in a new report. According to news reporting originating in Pasadena, California, by NewsRx journalists, research stated, “This article studies competition under information heterogeneity in selection markets and examines the impact of public information regulations aimed at reducing information asymmetries between competing firms. We develop a novel model and introduce new empirical strategies to analyse imperfect competition in markets where firms have heterogeneous information about consumers, vary in cost structures, and offer differentiated products.”

Funders for this research include Chinese University of Hong Kong, University of Hong Kong, Princeton, Rochester, European Commission Joint Research Centre, Ronald and Maxine Linde Institute of Economic and Management Sciences, Bank of Italy.

The news reporters obtained a quote from the research from the California Institute of Technology (Caltech), “Using data from the Italian auto insurance market, we find substantial differences in the precision of risk ratings across insurers, and those with less accurate risk-rating algorithms tend to have more efficient cost structures. We assess the equilibrium effects of giving firms equal access to aggregated risk information from a centralized bureau. This policy significantly reduces prices by increasing competition, leading to a 15.7% boost in consumer surplus, almost reaching the efficiency benchmark where firms have full knowledge of consumers’ true risk.”

According to the news reporters, the research concluded: “Aggregating information through the bureau favours low-risk consumers and reduces average costs by 12 euros per contract through more efficient insurer-insuree matching.”

This research has been peer-reviewed.

For more information on this research see: Competing Under Information Heterogeneity: Evidence From Auto Insurance. Review of Economic Studies, 2026. Review of Economic Studies can be contacted at: Oxford Univ Press, Great Clarendon St, Oxford OX2 6DP, England. (Oxford University Press - http://www.oup.com/; Review of Economic Studies - restud.oxfordjournals.org)

Our news correspondents report that additional information may be obtained by contacting Yi Xin, California Institute of Technology, Division of Humanities and Social Sciences, Pasadena, CA 91125, United States. Additional authors for this research include Marco Cosconati, Fan Wu and Yizhou Jin.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1093/restud/rdag058. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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