How can matched pairs be used to derive an adjustment statistically?
Correct Answer
B) By computing the differences across several pairs
Why this is correct: By computing the differences across several pairs. The governing concept is that matched-pair analysis isolates the value contribution of a single feature by comparing otherwise similar sales. Using several pairs provides multiple observations, allowing analysis of central tendency (e.g., median) and spread, which supports a more reliable adjustment. Why the other choices are wrong: By averaging the prices of all the sales involved does not isolate the feature's value contribution. By running a regression on a single pair of sales provides only one data point, which may be idiosyncratic. By ranking each pair from superior to inferior is a qualitative step, not a statistical derivation method. Exam tip: Use multiple matched pairs to derive a supportable adjustment; a single pair is merely anecdotal evidence.
Why This Is the Correct Answer
Why this is correct: By computing the differences across several pairs. The governing concept is that matched-pair analysis isolates the value contribution of a single feature by comparing otherwise similar sales. Using several pairs provides multiple observations, allowing analysis of central tendency (e.g., median) and spread, which supports a more reliable adjustment. Why the other choices are wrong: By averaging the prices of all the sales involved does not isolate the feature's value contribution. By running a regression on a single pair of sales provides only one data point, which may be idiosyncratic. By ranking each pair from superior to inferior is a qualitative step, not a statistical derivation method. Exam tip: Use multiple matched pairs to derive a supportable adjustment; a single pair is merely anecdotal evidence.
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