The Theory of Fuzzy Logic and its Application to Real Estate Valuation

Abstract

Fuzzy logic is based on the central idea that in fuzzy sets each element in the set can assume a value from 0 to 1, not just 0 or 1, as in classic set theory. Thus, qualitative characteristics and numerically scaled measures can exhibit gradations in the extent to which they belong to the relevant sets for evaluation. This degree of membership of each element is a measure of the element’s "belonging" to the set, and thus of the precision with which it explains the phenomenon being evaluated. Fuzzy sets can be combined to produce meaningful conclusions, and inferences can be made, given a specified fuzzy input function. The article demonstrates the application of fuzzy logic to an income-producing property, with a resulting fuzzy set output.