Whereas a typical paper published in an economic journal might devote a few lines to the economic theory on which their research is based, an undergraduate economics thesis is intended to demonstrate mastery of certain models of theory. I started thinking about this as I was starting to feel that I had conquered the behemoth of my data analysis, and realized that I had done minimal reading concerning the theory in which I was grounding my experiment. So, I began to delve deeper into how I was connecting my econometric model to the theoretical model of Hedonic Analysis which is presented in literature.
In the case of Hedonic Analysis, the best model is arguably the first, and I returned to the seminal paper on Hedonic Analysis published by Sherwin Rosen in 1974. Rosen connects the framework of hedonic regression to the utility maximization model, showing that the housing market can reveal the value of its constituent characteristics in a perfectly competitive market equilibrium (see the figure to the left). I go into more detail in my Theory section, but suffice to say that I have spent much of my recent energy on this project in connecting with grounding theory
