Sale Rates And Price Movements In Art Auctions

Abstract: The failure of many paintings to sell in art auctions indicates the presence of reserve prices set by sellers. This paper examines the relationship between sale rates and price surprises over time in art auctions. Using data on contemporary and impressionist art, we show that while sale rates appear to have little relationship to current prices, there exists a strong positive relationship of sale rates to unexpected aggregate price changes, which is reminiscent of a Phillips curve. As a result, sale rates provide a useful quantity indicator of the strength of the art market. The data also indicate that sale rates revert to â??normalâ?? very quickly following a price surprise. We estimate an empirical model to measure normal sale rates. We also find evidence that the reserve price is set on average at about 70% of the auctioneer's low estimate, as published in the auction catalog

This paper contains a review of the burgeoning research that has been designed to shed light on how the art auction system actually works and what it indicates about price formation. First, we find that in recent years returns on art assets appear to be little different from returns on other assets. In addition, some researchers have found that because of the weak correlation between art asset returns with other returns, there may be a case for the inclusion of art assets in a diversified portfolio. Second, we find evidence of several anomalies in art market pricing. The evidence clearly suggests that, contrary to the view of the art trade, 'masterpieces' underperform the market. In addition, there is considerable evidence that there are fairly long periods in which art prices may diverge across geographic areas and even auction houses. Third, we review the public record of the criminal trial of Sotheby's former Chairman, who was accused of price fixing, to show how the collusion with Christie's, the other great public auction house, was actually engineered. Contrary to the way the proceeds from the settlement of the civil suit in this case were distributed, we show that buyers were almost certainly not injured by the collusion, but that sellers were. In addition, based on the public record of settlement, it appears that the plaintiffs in the civil suit were very handsomely repaid for their injury. Finally, we review the extensive research on the effects of the auction institution on price formation. There is now considerable theoretical research on strategic behavior in auctions, much of it in response to empirical findings, and we review three key findings. First, the evidence suggests that art experts provide extremely accurate predictions of market prices, but that these predictions do not optimally process the publicly available information. Second, high reserve prices, and the resulting high unsold ('buy-in') rates are best explained as optimal search in the face of stochastic demand. Third, extensive research has documented that the prices of identical objects are more likely to decline than to increase when multiple units are sold, and this has led to considerable theoretical research. Subsequent empirical research has tended to document declining demand prices even when the objects are imperfect substitutes.

Markets -- Cost -- Price -- Structure -- Failure -- Power -- Labor -- Property -- Investment -- Systems.

Record prices and substantial profits have been and still are being achieved on the art market. Yet anyone who wants to get involved needs to be informed: what distinguishes the English type of auction from one in the Netherlands? What differentiates a vintage from a period, modern, or estate print? Dirk Boll, managing director of Christie's in Zurich, explains this and other technical terms while providing us with insight into the rapidly changing art market: the increasingly symbiotic relationship between auctioneers and art dealers, the strategies used by the big auction houses, recognizing and creating trends, the profiles of the individual art fairs, promising new areas for collectors, and the future development of the art market are just some of the fascinating themes the expert knowledgeably and humorously deals with in concise chapters. A trained lawyer, Boll is as competent at shedding light on the legal parameters regulating the acquisition of art as he is in elucidating the difficulties surrounding looted art and restitution procedures. (German edition ISBN 978-3-7757-2814-0) Language: English

Cultural economics has become well established as a subject of interest for students and teachers of courses ranging from economics to arts administration as well as for policy-makers and practitioners in the creative industries. Digitisation has had a tremendous impact on many areas of the creative economy and the third edition of this popular book fully reflects it.

The rapidly changing and evolving art market might appear to be chaotic to the casual observer, with new highs, potential lows, and tastes and fashions changing season to season. Economists, however, view the actions of buyers and sellers as constituting an identifiable market. They have, for some decades, studied such issues as artistic productivity and "death effects" on prices, investment returns, and on the basis of the behavior and estimated prices in auction markets. The Economics of American Art analyzes the most pervasive economic issues facing the art world, applied to the whole spectrum of American art. The book begins by looking at how a market for American art developed, how the politics of the post-war era shaped, at least in large part, the direction of American art, and how this legacy continues into contemporary art today. The book then tackles several salient, integral questions animating the American art world: Are age and "type" of artist (i.e. traditional or "innovative") related and, if so, how might they be related to productivity? Is investment in American art a remunerative endeavor compared to other investment possibilities? Do economic insights provide understanding of fakes, fraud and theft of art, particularly American art, and is it possible to prevent art crime? Is there is a boom (or a bust) in the market for contemporary American art as might be found in other markets? The ongoing evolution of American art is attended by a massive number of influences, and the economic concepts employed in this volume will complement other critical and important cultural studies of art. Both practical and accessible, The Economics of American Art will be essential for collectors, auction houses, American art experts of all kinds, museums, gallery owners and, not least, by economists with continuing scholarly interests in these matters.