Hedonic Regression
Hedonic regression, or more generally hedonic demand theory, in economics is a method of estimating demand or prices. It decomposes the item being researched into its constituent characteristics, and obtains estimates of the value of each characteristic. In essence it assumes that there is a separate market for each characteristic. It may be estimated using ordinary least squares (OLS) regression analysis. Often an attribute vector (or dummy variable) is assigned to each characteristic or group of characteristics. Each characteristic within a vector is either included in the regression or not, by multiplying it by either 1 or 0.
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