136k views
3 votes
What are the two primary factors where calculations would rarely work in a matched pairs technique?

A.) Cost and comparison factors
B.) The adjustment for one item of difference may already include a partial adjustment for another item of difference and that there can be a range of prices considered reasonable for the applicable market because buyers and sellers have different opinions of the value of each comparable item
C.) Abstractions for lot size and floor plan
D.) Similar homes with the same floor plan where home 1 has a 1 car attached garage and home 2 has a 2 car attached garage

User Dirus
by
8.5k points

1 Answer

1 vote

Final answer:

The two primary factors where calculations might fail in the matched pairs technique are overlapping adjustments and differing market opinions. Imperfect information and reference point-based valuation make pricing agreements challenging. These issues highlight the complexity of valuations in a market setting.

Step-by-step explanation:

The two primary factors where calculations would rarely work in a matched pairs technique are B) The adjustment for one item of difference may already include a partial adjustment for another item of difference and that there can be a range of prices considered reasonable for the applicable market because buyers and sellers have different opinions of the value of each comparable item.

When performing a hypothesis test on matched or paired samples, it is true that B) Two measurements are drawn from the same pair of individuals or objects, and C) Two sample means are compared to each other. This demonstrates the complexity of such analyses, where perfect comparisons are seldom possible due to overlapping adjustments and subjective valuation.

Imperfect information often leads to difficulties in reaching an agreement on price between buyers and sellers because information asymmetry can cause differing opinions on what constitutes a fair price. Behavioral economists point out that most individuals do not view money or savings in absolute terms, but rather in relation to a reference point, often as percentages, which further complicates the price agreement process.

User Shawn Mehan
by
7.9k points

Related questions

1 answer
1 vote
97.5k views