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Rule-Based and Case-Based Reasoning in Housing Prices

Author

Listed:
  • Gayer Gabrielle

    () (Tel-Aviv University)

  • Gilboa Itzhak

    () (Tel-Aviv University, HEC, and Yale University)

  • Lieberman Offer

    () (The Technion, Israel Institute of Technology)

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).

Suggested Citation

  • Gayer Gabrielle & Gilboa Itzhak & Lieberman Offer, 2007. "Rule-Based and Case-Based Reasoning in Housing Prices," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-37, April.
    • Handle: RePEc:bpj:bejtec:v:7:y:2007:i:1:n:10
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    References listed on IDEAS

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    1. Won Kim, Chong & Phipps, Tim T. & Anselin, Luc, 2003. "Measuring the benefits of air quality improvement: a spatial hedonic approach," Journal of Environmental Economics and Management, Elsevier, vol. 45(1), pages 24-39, January.
    2. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
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    Citations

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    Cited by:

    1. Gilboa, Itzhak & Lieberman, Offer & Schmeidler, David, 2011. "A similarity-based approach to prediction," Journal of Econometrics, Elsevier, vol. 162(1), pages 124-131, May.
    2. Todd Guilfoos & Andreas Pape, 2016. "Predicting human cooperation in the Prisoner’s Dilemma using case-based decision theory," Theory and Decision, Springer, vol. 80(1), pages 1-32, January.
    3. Itzhak Gilboa, 2010. "Questions in Decision Theory," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 1-19, September.
    4. Oscar Melo & Carlos Melo & Jorge Mateu, 2015. "Distance-based beta regression for prediction of mutual funds," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 99(1), pages 83-106, January.
    5. Itzhak Gilboa & Offer Lieberman & David Schmeidler, 2006. "Empirical Similarity," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 433-444, August.
    6. Pape, Andreas & Kurtz, Kenneth, 2013. "Evaluating Case-based Decision Theory: Predicting Empirical Patterns of Human Classification Learning (Extensions)," MPRA Paper 45206, University Library of Munich, Germany.
    7. Han Bleichrodt & Martin Filko & Amit Kothiyal & Peter P. Wakker, 2017. "Making Case-Based Decision Theory Directly Observable," American Economic Journal: Microeconomics, American Economic Association, vol. 9(1), pages 123-151, February.
    8. Kapetanios, George & Mitchell, James & Shin, Yongcheol, 2014. "A nonlinear panel data model of cross-sectional dependence," Journal of Econometrics, Elsevier, vol. 179(2), pages 134-157.
    9. Pape, Andreas Duus & Kurtz, Kenneth J., 2013. "Evaluating case-based decision theory: Predicting empirical patterns of human classification learning," Games and Economic Behavior, Elsevier, vol. 82(C), pages 52-65.
    10. Teitelbaum, Joshua C., 2013. "Asymmetric empirical similarity," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 346-351.
    11. Keita Kinjo & Shinya Sugawara, 2014. "An Empirical Analysis for a Case-based Decision to Watch Japanese TV dramas," CIRJE F-Series CIRJE-F-940, CIRJE, Faculty of Economics, University of Tokyo.
    12. Brit Grosskopf & Rajiv Sarin & Elizabeth Watson, 2015. "An experiment on case-based decision making," Theory and Decision, Springer, vol. 79(4), pages 639-666, December.

    More about this item

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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