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).
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∗We wish to thank Don Brown for the conversations that greatly influenced this work. We thank the Student Association of Tel-Aviv University and Professor Juval Portugali for the data. This work was supported by grants from the Sapir Center at Tel-Aviv University as well as ISF grants no. 975/03 and 355/06.