CFDP 1493

Rule-based and Case-based Reasoning in Housing Prices

Author(s): 

Publication Date: November 2004

Pages: 34

Abstract: 

People reason about real-estate prices both in terms of general rules and in terms of analogies to similar cases. We propose to empirically test which mode of reasoning fits the data better. To this end, we develop the statistical techniques required for the estimation of the case-based model. It is hypothesized that case-based reasoning will have relatively more explanatory power in databases of rental apartments, whereas rule-based reasoning will have a relative advantage in sales data. We motivate this hypothesis on theoretical grounds, and find empirical support for it by comparing the two statistical techniques (rule-based and case-based) on two databases (rentals and sales).

Keywords: 

Housing, similarity, regression, case-based reasoning, rule-based reasoning

JEL Classification Codes:  C1, C8, D8, R1

Note: 

Published in B.E. Journal in Theoretical Economics (April 2007), 7(1) (Advances), Article 10 [DOI]