Question: Discuss the context in which Example can be analyzed by using a random-effects model.
Example: There are claims that the Japanese have now joined the English and people in the United States in paying top dollar for paintings at art auctions. Suppose that an art dealer is interested in testing two hypotheses. The first is that paintings sell for the same price, on average, in London, New York, and Tokyo. The second hypothesis is that works of Picasso, Chagall, and Dali sell for the same average price. The dealer is also aware of a third question.
This is the question of a possible interaction between the location (and thus the buyers: people from the United States, English, Japanese) and the artist. Data on auction prices of 10 works of art by each of the three painters at each of the three cities are collected, and a two-way ANOVA is run on a computer. The results include the following: The sums of squares associated with the location (factor A) is 1,824. The sum of squares associated with the artist (factor B) is 2,230. The sum of squares for interactions is 804. The sum of squares for error is 8,262. Construct the ANOVA table, carry out the hypothesis tests, and state your conclusions.