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Applying a CART-based approach for the diagnostics of mass appraisal models

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  • Antipov, Evgeny
  • Pokryshevskaya, Elena

Abstract

In this paper an approach for automatic detection of segments where a regression model significantly underperforms and for detecting segments with systematically under- or overestimated prediction is introduced. This segmentational approach is applicable to various expert systems including, but not limited to, those used for the mass appraisal. The proposed approach may be useful for various regression analysis applications, especially those with strong heteroscedasticity. It helps to reveal segments for which separate models or appraiser assistance are desirable. The segmentational approach has been applied to a mass appraisal model based on the Random Forest algorithm.

Suggested Citation

  • Antipov, Evgeny & Pokryshevskaya, Elena, 2010. "Applying a CART-based approach for the diagnostics of mass appraisal models," MPRA Paper 27646, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:27646
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    References listed on IDEAS

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    1. Carlo Bagnoli & Halbert C. Smith, 1998. "The Theory of Fuzzy Logic and its Application to Real Estate Valuation," Journal of Real Estate Research, American Real Estate Society, vol. 16(2), pages 169-200.
    2. Young-Lung Lee & Chang Jung & Yih Yeh Kuang, 2003. "Fair Evaluation of real Estate Value in Urban Area via Fuzzy Theory," ERES eres2003_198, European Real Estate Society (ERES).
    3. Carlos Martins-Filho & Okmyung Bin, 2005. "Estimation of hedonic price functions via additive nonparametric regression," Empirical Economics, Springer, vol. 30(1), pages 93-114, January.
    4. Nghiep Nguyen & Al Cripps, 2001. "Predicting Housing Value: A Comparison of Multiple Regression Analysis and Artificial Neural Networks," Journal of Real Estate Research, American Real Estate Society, vol. 22(3), pages 313-336.
    5. Pace, R Kelley, 1995. "Parametric, Semiparametric, and Nonparametric Estimation of Characteristic Values within Mass Assessment and Hedonic Pricing Models," The Journal of Real Estate Finance and Economics, Springer, vol. 11(3), pages 195-217, November.
    6. George H. Lentz & Ko Wang, 1998. "Residential Appraisal and the Lending Process: A Survey of Issues," Journal of Real Estate Research, American Real Estate Society, vol. 15(1), pages 11-40.
    7. Han-Bin Kang & Alan K. Reichert, 1991. "An Empirical Analysis of Hedonic Regression and Grid-Adjustment Techniques in Real Estate Appraisal," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 19(1), pages 70-91.
    8. Laakso, Seppo, . "Urban Housing Prices and the Demand for Housing Characteristics. A Study on Housing Prices and the Willingness to pay for Housing Characteristics and Local Public Goods in the Helsinki Metropolitan Ar," ETLA A, The Research Institute of the Finnish Economy, number 27.
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    More about this item

    Keywords

    CART; model diagnostics; mass appraisal; real estate; Random forest; heteroscedasticity;

    JEL classification:

    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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