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The Auction Market For Modern Prints: Confirmations, Contradictions, And New Puzzles

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  • JAMES E. PESANDO
  • PAULINE M. SHUM

Abstract

Using a large data set with 80,214 repeat sales, we find that the real return on a diversified portfolio of modern prints sold at auctions worldwide averaged a modest 1.51% during the period 1977–2004. We address several issues regarding the performance of modern prints as investments: the selection bias arising from the self‐interest of auction houses; the impact of an ever‐expanding universe of auction houses on investment returns; the “masterpiece” effect, or whether more expensive works of art outperform the market as a whole; and the differences in returns that arise due to random fluctuations in collector tastes. (JEL Z11, G11, G14)

Suggested Citation

  • James E. Pesando & Pauline M. Shum, 2008. "The Auction Market For Modern Prints: Confirmations, Contradictions, And New Puzzles," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 149-159, April.
    • Handle: RePEc:bla:ecinqu:v:46:y:2008:i:2:p:149-159
    DOI: 10.1111/j.1465-7295.2007.00070.x
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    References listed on IDEAS

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    2. William N. Goetzmann & Luc Renneboog & Christophe Spaenjers, 2011. "Art and Money," American Economic Review, American Economic Association, vol. 101(3), pages 222-226, May.
    3. Ünsal Özdilek, 2013. "Visual autocorrelation of prices," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 37(2), pages 203-223, May.
    4. Eric Fur, 2023. "Risk and return of classic car market prices: passion or financial investment?," Journal of Asset Management, Palgrave Macmillan, vol. 24(1), pages 59-68, February.
    5. Luc Renneboog & Christophe Spaenjers, 2013. "Buying Beauty: On Prices and Returns in the Art Market," Management Science, INFORMS, vol. 59(1), pages 36-53, February.
    6. Jianping Mei & Michael A. Moses & Zur B. Shapira & Lawrence J. White, 2010. "Loss Aversion? What Loss Aversion? Some Surprising Evidence from the Art Market," Working Papers 10-10, New York University, Leonard N. Stern School of Business, Department of Economics.
    7. Heinrich Ursprung, 2020. "Jane Beats Them All: Price Formation and Financial Returns to Investing in Rare Books," CESifo Working Paper Series 8302, CESifo.
    8. Park, Heungju & Ju, Lan & Liang, Tianyu & Tu, Zhiyong, 2017. "Horizon analysis of art investments: Evidence from the Chinese market," Pacific-Basin Finance Journal, Elsevier, vol. 41(C), pages 17-25.
    9. Etro, Federico & Stepanova, Elena, 2021. "Art return rates from old master paintings to contemporary art," Journal of Economic Behavior & Organization, Elsevier, vol. 181(C), pages 94-116.
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    12. Yunhan Li & J. Scott Shonkwiler, 2021. "Assessing the Role of Ordering in Sequential English Auctions – Evidence from the Online Western Video Market Auction," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(1), pages 90-105, January.
    13. Simon Levy & Maxime L. D. Nicolas, 2024. "Modern Portfolio Diversification with Arte-Blue Chip Index," Papers 2409.18816, arXiv.org.
    14. Kräussl, Roman & Mirgorodskaya, Elizaveta, 2016. "The winner's curse on art markets," CFS Working Paper Series 564, Center for Financial Studies (CFS).
    15. Jansson Johan, 2014. "Temporary events and spaces in the Swedish primary art market," ZFW – Advances in Economic Geography, De Gruyter, vol. 58(1), pages 202-215, October.
    16. Le Fur, Eric, 2020. "Dynamics of the global fine art market prices," The Quarterly Review of Economics and Finance, Elsevier, vol. 76(C), pages 167-180.
    17. 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

    JEL classification:

    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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