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Price and Death

Author

Listed:
  • Jun-ichi Itaya
  • Heinrich Ursprung

Abstract

How does an artist’s death impact on the price of his or her works of art? We investigate this question in an infinite-horizon dynamic general equilibrium setting. Employing the open-loop Stackelberg equilibrium concept to describe the interactive behaviour of collectors and artists, we find that the art price remains at some well-defined "pseudo-competitive" level as long as the artist is alive. Only when the artist unexpectedly dies, the price increases on impact. This so-called death effect varies negatively with the artist’s age at death. If it is well known that an artist is ailing from some terminal illness and his or her death thus does not come as a surprise, the price of the ailing artist’s work increases when the news of the ailment is divulged; the price immediately jumps to the level which will prevail at the time when the artist dies.

Suggested Citation

  • Jun-ichi Itaya & Heinrich Ursprung, 2008. "Price and Death," CESifo Working Paper Series 2213, CESifo.
    • Handle: RePEc:ces:ceswps:_2213
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp2213.pdf
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    References listed on IDEAS

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    Cited by:

    1. Heinrich W. Ursprung & Christian Wiermann, 2011. "Reputation, Price, And Death: An Empirical Analysis Of Art Price Formation," Economic Inquiry, Western Economic Association International, vol. 49(3), pages 697-715, July.
    2. Galbraith, John W. & Hodgson, Douglas J., 2012. "Dimension reduction and model averaging for estimation of artists' age-valuation profiles," European Economic Review, Elsevier, vol. 56(3), pages 422-435.
    3. Dibooglu, Selahattin, 1996. "Real disturbances, relative prices and purchasing power parity," Journal of Macroeconomics, Elsevier, vol. 18(1), pages 69-87.

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