Rule-Based and Case-Based Reasoning in Housing Prices

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 casebased 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).

Predicting human cooperation in the Prisoner’s Dilemma using case-based decision theory

“…Therefore, we feel these methods are complementary: insights developed in their method can be applied to CBSA for application to other settings. Gayer et al (2007) investigate whether case-based reasoning appears to explain human decision-making using housing sales and rental data. They hypothesize and find that sales data are better explained by rule-based measures because sales are an investment for eventual resale and rules are easier to communicate, while rental data are better explained by case-based measures because rentals are a pure consumption good where communication of measures is irrelevant.…”

A similarity-based approach to prediction

“…For our purposes, it is important to note that the combination axiom does not allow one to learn the similarity function from the data. Correspondingly, formula (1) does not allow the similarity function to change with the 2 See Gayer et al (2007).…”

E-commerce Applications of the Hybrid Reasoning Method

“…While Ebay is the marketplace architecture for buying and selling goods Case-based reasoning uses past cases and experiences to find a solution to the problem. [7]. Some of the tasks that case-based reasoning systems have to complete include: identifying the current problem, finding a past case similar to the problem, using the case to suggest the solution to the current problem, and validate the proposed solution and update the system according to the new experience.…”