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Understanding the artwork pricing: some theoretical models

Author

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  • Francesco Angelini

    (Department of Statistics, University of Bologna, Italy)

  • Massimiliano Castellani

    (Department of Statistics, University of Bologna, Italy; The Rimini Centre for Economic Analysis)

Abstract

This paper analyses the pricing of new artworks sold for the first time in the private art market, investigating price-formation mechanisms at work. Using a bargaining game approach, we find that the bargaining power of each agent is key in identifying the market channel preferred by the artist and, then, her incentive in creating a new artwork.

Suggested Citation

  • Francesco Angelini & Massimiliano Castellani, 2017. "Understanding the artwork pricing: some theoretical models," Working Paper series 17-25, Rimini Centre for Economic Analysis, revised Mar 2018.
    • Handle: RePEc:rim:rimwps:17-25
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    References listed on IDEAS

    as
    1. Sylvie Lupton, 2005. "Shared quality uncertainty and the introduction of indeterminate goods," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 29(3), pages 399-421, May.
    2. Bulow, Jeremy & Klemperer, Paul, 1996. "Auctions versus Negotiations," American Economic Review, American Economic Association, vol. 86(1), pages 180-194, March.
    3. Arnold, Michael A & Lippman, Steven A, 1998. "Posted Prices versus Bargaining in Markets with Asymmetric Information," Economic Inquiry, Western Economic Association International, vol. 36(3), pages 450-457, July.
    4. Jeremy Bulow & Paul Klemperer, 2009. "Why Do Sellers (Usually) Prefer Auctions?," American Economic Review, American Economic Association, vol. 99(4), pages 1544-1575, September.
    5. Victor A. Ginsburgh & Jan C. van Ours, 2003. "Expert Opinion and Compensation: Evidence from a Musical Competition," American Economic Review, American Economic Association, vol. 93(1), pages 289-296, March.
    6. Baumol, William J, 1986. "Unnatural Value: Or Art Investment as Floating Crap Game," American Economic Review, American Economic Association, vol. 76(2), pages 10-14, May.
    7. Wang, Ruqu, 1993. "Auctions versus Posted-Price Selling," American Economic Review, American Economic Association, vol. 83(4), pages 838-851, September.
    8. Cason, Timothy N. & Friedman, Daniel & Milam, Garrett H., 2003. "Bargaining versus posted price competition in customer markets," International Journal of Industrial Organization, Elsevier, vol. 21(2), pages 223-251, February.
    9. Susanne Schönfeld & Andreas Reinstaller, 2007. "The effects of gallery and artist reputation on prices in the primary market for art: a note," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 31(2), pages 143-153, June.
    10. Jeremy Bulow & Paul Klemperer, 2009. "Why Do Sellers (Usually) Prefer Auctions?," American Economic Review, American Economic Association, vol. 99(4), pages 1544-75, September.
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    Cited by:

    1. Francesco Angelini & Massimiliano Castellani & Lorenzo Zirulia, 2022. "Overconfidence in the art market: a bargaining pricing model with asymmetric disinformation," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(3), pages 961-988, October.
    2. Angelini, Francesco & Castellani, Massimiliano, 2022. "Price and information disclosure in the private art market: A signalling game," Research in Economics, Elsevier, vol. 76(1), pages 14-20.
    3. Lee, Boram & Fraser, Ian & Fillis, Ian, 2022. "To sell or not to sell? Pricing strategies of newly-graduated artists," Journal of Business Research, Elsevier, vol. 145(C), pages 595-604.

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    More about this item

    Keywords

    bargaining; pricing; cultural economics;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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