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On the relationship between reserve prices and low estimates in art auctions

Author

Listed:
  • Massimiliano Castellani

    (University of Bologna)

  • Pierpaolo Pattitoni

    (University of Bologna
    Rimini Centre for Economic Analysis (RCEA))

  • Antonello Eugenio Scorcu

    (University of Bologna)

Abstract

Using a unique hand-collected dataset comprising all auctions held by a major Italian auction house in Italy from 1994 to 1997 and including confidential information on reserve prices, we find empirical evidence in support of several studies in cultural economics literature that reserve prices are set in a range of approximately 75 % of low presale estimates.

Suggested Citation

  • Massimiliano Castellani & Pierpaolo Pattitoni & Antonello Eugenio Scorcu, 2018. "On the relationship between reserve prices and low estimates in art auctions," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(1), pages 45-56, February.
    • Handle: RePEc:kap:jculte:v:42:y:2018:i:1:d:10.1007_s10824-016-9279-4
    DOI: 10.1007/s10824-016-9279-4
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    References listed on IDEAS

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    1. Orley Ashenfelter & Kathryn Graddy, 2011. "Sale Rates and Price Movements in Art Auctions," American Economic Review, American Economic Association, vol. 101(3), pages 212-216, May.
    2. Fertig, Michael & Görlitz, Katja, 2013. "Missing wages: How to test for biased estimates in wage functions?," Economics Letters, Elsevier, vol. 118(2), pages 269-271.
    3. Orley Ashenfelter & Kathryn Graddy, 2003. "Auctions and the Price of Art," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 763-787, September.
    4. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    5. Jianping Mei & Michael Moses, 2005. "Vested Interest and Biased Price Estimates: Evidence from an Auction Market," Journal of Finance, American Finance Association, vol. 60(5), pages 2409-2435, October.
    6. McAndrew, Clare & Thompson, Rex, 2007. "The collateral value of fine art," Journal of Banking & Finance, Elsevier, vol. 31(3), pages 589-607, March.
    7. Guido Candela & Massimiliano Castellani & Pierpaolo Pattitoni, 2012. "Tribal art market: signs and signals," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 36(4), pages 289-308, November.
    8. Marinelli, Nicoletta & Palomba, Giulio, 2011. "A model for pricing Italian Contemporary Art paintings at auction," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(2), pages 212-224, May.
    9. Orley Ashenfelter & Kathryn Graddy, 2011. "Sale Rates and Price Movements in Art Auctions," American Economic Review, American Economic Association, vol. 101(3), pages 212-216, May.
    10. Clare McAndrew & James L Smith & Rex Thompson, 2012. "The impact of reserve prices on the perceived bias of expert appraisals of fine art," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(2), pages 235-252, March.
    11. repec:pri:cepsud:214ashenfelter is not listed on IDEAS
    12. Collins, Alan & Scorcu, Antonello & Zanola, Roberto, 2009. "Reconsidering hedonic art price indexes," Economics Letters, Elsevier, vol. 104(2), pages 57-60, August.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Edward Oczkowski, 2021. "The catalogue raisonné and art auction prices: the case of Berthe Morisot," Empirical Economics, Springer, vol. 61(3), pages 1669-1687, September.
    2. Régis Blazy & Marie Blum, 2022. "Horizontal and vertical differentiation in comic art auctions," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1382-1415, July.
    3. Brunella Bruno & Emilia Garcia‐Appendini & Giacomo Nocera, 2018. "Experience and Brokerage in Asset Markets: Evidence from Art Auctions," Financial Management, Financial Management Association International, vol. 47(4), pages 833-864, December.
    4. Francesco Angelini & Massimiliano Castellani & Pierpaolo Pattitoni, 2023. "You can’t export that! Export ban for modern and contemporary Italian art," European Journal of Law and Economics, Springer, vol. 56(3), pages 533-557, December.
    5. Fikret Korhan Turan & Zeynep Tosun, 2023. "Sustainable development of art industry and a statistical analysis of the factors that influence the gallery prices of contemporary artworks," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(3), pages 1790-1804, June.
    6. Anne-Sophie V. E. Radermecker, 2019. "Artworks without names: an insight into the market for anonymous paintings," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 43(3), pages 443-483, September.

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    More about this item

    Keywords

    Reserve price; Low estimate; Auction house;
    All these keywords.

    JEL classification:

    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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