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This paper introduces an improved procedure for estimating capital asset price indexes. We jointly estimate conventional hedonic and repeat sales models via maximum-likelihood procedures, thereby taking advantage of the unique features of the individual models and using all the data that are available. Our model captures depreciation within the repeat sales model and accounts for serial correlation in hedonic data. The improvement in precision obtained by estimating the joint model is illustrated by smaller standard errors and narrower interval estimates for the resulting price indexes. We also carry out a simulation experiment that shows estimation errors significantly smaller using the joint estimation technique than either of the individual models or the GLS estimator of Case and Quigley (1991). © 1997 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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To construct a price judgment, consumers compare a focal price with one or more reference prices. However, reference price operationalizations in the brand choice literature use single-point summary measures that cannot account for several distributional effects. To account for effects beyond the first moment of the reference price distribution, the authors specify price judgments in models of brand choice in accordance with range–frequency theory. The findings indicate that range–frequency price judgments provide a more complete specification of reference price effects and become more important with an increase in the second and third moments of a reference price distribution. The data also indicate that range effects are stronger for coupon users and frequency effects are stronger for consumers exposed to a trend of prices. The results have several implications for choice modeling, pricing theory, and pricing strategy.

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