Who performs better? AVMs vs hedonic models

Purpose In the literature there are numerous tests that compare the accuracy of automated valuation models (AVMs). These models first train themselves with price data and property characteristics, then they are tested by measuring their ability to predict prices. Most of them compare the effectiveness of traditional econometric models against the use of machine learning algorithms. Although the latter seem to offer better performance, there is not yet a complete survey of the literature to confirm the hypothesis. Design/methodology/approach All tests comparing regression analysis and AVMs machine learning on the same data set have been identified. The scores obtained in terms of accuracy were then compared with each other. Findings Machine learning models are more accurate than traditional regression analysis in their ability to predict value. Nevertheless, many authors point out as their limit their black box nature and their poor inferential abilities. Originality/value According to the author, this is the first systematic review that collects all the articles produced on the subject done comparing the results obtained.