With a GPS system attached to each insured vehicle, insurance companies are able to chargeusage-based insurance rates,” depending on how (e.g., hard breaking, fast acceleration), howmuch (mileage), when, and possibly where the insured vehicle is driven. Autograph (thenassociated with Progressive), a rm that was awarded a U.S. patent in 2001, was shown to savepolicy holders in Houston an average of 25% of what they were previously paying. (i) Why areusage-based insurance rates lower thanat-rate insurance fees? Give two separate reasons andexplain. [Hint: One is associated with hidden information, one associated with hidden action.]