Does Signaling Work in Markets for Information Services? An Empirical Investigation for Insurance Intermediaries in Germany

Martina Eckardt ()

No 77, Thuenen-Series of Applied Economic Theory from University of Rostock, Institute of Economics, Germany

Abstract: Insurance intermediation services are information services which exhibit strong information asymmetries. We empirically analyze whether signaling works in the German market for insurance intermediation services. For this a signal must increase service quality and be easily identifiable by consumers so that it pays for intermediaries to spend the related costs. By using OLS and logit estimations we test whether intermediary type, reputational activities and a variety of signaling instruments work as credible signals. Our findings confirm the main hypotheses derived from signaling theory as to the poor working of market forces in markets for information services. Accordingly, public policy regulation is necessary to mitigate the resulting problems.

Keywords: signaling; insurance intermediation; information services (search for similar items in EconPapers)
JEL-codes: D82 G22 L15 L86 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ias and nep-mic
Date: 2007
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