Rule-Based and Case-Based Reasoning in Housing Prices

Gabrielle Gayer, Itzhak Gilboa and Offer Lieberman
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Gabrielle Gayer: Tel-Aviv University
Itzhak Gilboa: Tel-Aviv University, HEC, and Yale University
Offer Lieberman: The Technion, Israel Institute of Technology

The B.E. Journal of Theoretical Economics, 2007, vol. 7, issue 1

Abstract: People reason about real-estate prices both in terms of general rules and in terms of analogies to similar cases. We propose to examine empirically 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 models (rule-based and case-based) on two databases (rentals and sales).

Date: 2007
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Persistent link: http://EconPapers.repec.org/RePEc:bpj:bejtec:v:7:y:2007:i:1:n:10

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