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> [T]hey thought they already had good enough models to avoid taking large losses. That's a fair point; the essay doesn't do much to distinguish whether they d
by throwhauser 5y ago
> [T]hey thought they already had good enough models to avoid taking large losses.
That's a fair point; the essay doesn't do much to distinguish whether they didn't know they needed to take losses, or couldn't take the pain of the losses.
Nevertheless, it's a pretty good analysis of what a company needs to do, in order to build a model relevant to their own actual business. They need to both know about the pain involved, and be prepared to take it. (And even then it might not work!) Third-party data (and suffering) might not be a good substitute.
- seoaeu 5y agoTheir model was something like buy houses for 'market_price(house) * 95%' and then sell them for 'market_price(house)'. The article argues that they should have devised a core complex model for asking prices, but an equally viable strategy would be to make sure their market price estimations were sufficiently accurate. That doesn't take any company specific information so it is entirely plausible (although false) that their Zestimate values would work well enough.