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Does the sun ‘shine’ on art prices?

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Author Info

  • De Silva, Dakshina G.
  • Pownall, Rachel A.J.
  • Wolk, Leonard

Abstract

This paper examines how variation in mood influences subjective risk and hence auction prices for art in London during the period 1990–2007. The private value of an object is closely related to taste and mood which is proxied for by the variation in weather. Using a unique data set that includes presale estimates for paintings sold through Sotheby's and Christie's auction houses as well as weather data for London from the British Atmospheric Data Centre we find that the lower part of the price distribution is populated with paintings with a relative high private value, whereas in the upper part, prices are driven primarily by the common value characteristics. Our findings have important implications for collectors and investors in the art market.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 82 (2012)
Issue (Month): 1 ()
Pages: 167-178

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Handle: RePEc:eee:jeborg:v:82:y:2012:i:1:p:167-178

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Auctions; Private value; Common value; Mood; Emotions; Cartel;

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References

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  1. Alan Beggs & Kathryn Graddy, 1997. "Declining Values and the Afternoon Effect: Evidence from Art Auctions," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 544-565, Autumn.
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  8. David Hirshleifer & Tyler Shumway, 2003. "Good Day Sunshine: Stock Returns and the Weather," Journal of Finance, American Finance Association, American Finance Association, vol. 58(3), pages 1009-1032, 06.
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  12. Emmanuel Guerre & Isabelle Perrigne & Quang Vuong, 2000. "Optimal Nonparametric Estimation of First-Price Auctions," Econometrica, Econometric Society, Econometric Society, vol. 68(3), pages 525-574, May.
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  14. Loughran, Tim & Schultz, Paul, 2004. "Weather, Stock Returns, and the Impact of Localized Trading Behavior," Journal of Financial and Quantitative Analysis, Cambridge University Press, Cambridge University Press, vol. 39(02), pages 343-364, June.
  15. Jianping Mei & Michael Moses, 2005. "Vested Interest and Biased Price Estimates: Evidence from an Auction Market," Journal of Finance, American Finance Association, American Finance Association, vol. 60(5), pages 2409-2435, October.
  16. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer.
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Cited by:
  1. Kathryn Graddy & Lara Loewenstein & Jianping Mei & Mike Moses & Rachel Pownall, 2014. "Anchoring or Loss Aversion? Empirical Evidence from Art Auctions," Working Papers, Brandeis University, Department of Economics and International Businesss School 73, Brandeis University, Department of Economics and International Businesss School.
  2. Kaustia, Markku & Rantapuska, Elias, 2013. "Does mood affect trading behavior?," SAFE Working Paper Series 4, Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt.

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