Property appraisal with a log - t predictive distribution

A multiplicative model with log-normal errors is used to appraisethe market value of a property and a natural conjugate prior,describing the beliefs of an expert appraiser about the parameters,is elicited. Loss is an asymmetric function of the predictedprice as a proportion of the actual price, and the optimal predictionis a multiplicative adjustment to the exponent of the predictivemean of the logarithm of price. The prediction of the priceof a property is made using both the elicited prior and tworeference priors. The robustness of the procedure is assessedby means of the evaluation of a number of elasticities of priceprediction with regard to changes in a parameter value, eitherof the prior distribution or the loss function.