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A Heckit Model of Sales Dynamics in Turkish Art Auctions: 2005-2008

Listed author(s):
  • Seçkin Aylin

    (Istanbul Bilgi University)

  • Atukeren Erdal

    (ETH Zurich, SBS Swiss Business School, BSL Business School Lausanne, University of Applied Sciences Northwestern Switzerland (FHNW))

Unsold artworks are excluded from a traditional hedonic price index as no observable price can be attached to them. The question is whether the exclusion of unsold artworks lead to a sample selection bias in the traditionally constructed art price indices. In this paper, we examine the art auction sales performance in Turkey for the period between January 2005 and February 2008 using a unique database which contains 11,212 sales records including unsold items. We employ the two-stage Heckit model. Our empirical model combines demand-side influences with supply-side characteristics as well as the auction microstructure. We find that there is no sample selection bias created by unsold works. This finding also provides an explanation for why the attempts in the literature to identify which works are (not) sold turned out to be largely unsuccessful. On the behavioural side, we confirm the existence of the âafternoon effectâ in both sales rates and in sales prices in Turkish art auctions. There is also some evidence for the âdeath effectâ and âmaster effectâ in both sales rates and sales prices. Finally, we find that the returns in the Turkish art market serve as a hedge against inflation in our sample period.

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Article provided by De Gruyter in its journal Review of Middle East Economics and Finance.

Volume (Year): 7 (2012)
Issue (Month): 3 (May)
Pages: 1-32

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Handle: RePEc:bpj:rmeecf:v:7:y:2012:i:3:n:2
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  1. Barbosa, Renata Leite & Campos, Nauro F, 2008. "Paintings and Numbers: An Econometric Investigation of Sales Rates, Prices and Returns in Latin American Art Auctions," CEPR Discussion Papers 6806, C.E.P.R. Discussion Papers.
  2. Victor Ginsburgh & Luc Bauwens, 2000. "Art experts and auctions :are pre-sale estimates unbiased and fully informative," ULB Institutional Repository 2013/152099, ULB -- Universite Libre de Bruxelles.
  3. 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.
  4. Chanel, O. & Gerard, L.A. & Ginsburgh, V., 1992. "The Relevence of Hedonic Price Indices the Case of Paintings," G.R.E.Q.A.M. 92a19, Universite Aix-Marseille III.
  5. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-161, January.
  6. Jianping Mei & Michael Moses, 2002. "Art as an Investment and the Underperformance of Masterpieces," American Economic Review, American Economic Association, vol. 92(5), pages 1656-1668, December.
  7. Erdal Atukeren & Aylin Seçkin, 2006. "Art and the Economy: A First Look at the Market for Paintings in Turkey," Economics Bulletin, AccessEcon, vol. 26(3), pages 1-13.
  8. Olivier Chanel & Louis-André Gérard-Varet & Victor Ginsburgh, 1996. "The relevance of hedonic price indices," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 20(1), pages 1-24, March.
  9. Clare M D'Souza & David Prentice, 2001. "Auctioneer Strategy and Pricing: Evidence from an Art Auction," Working Papers 2001.05 EDIRC Provider-In, School of Economics, La Trobe University.
  10. 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.
  11. Seçkin Aylin & Atukeren Erdal, 2012. "A Heckit Model of Sales Dynamics in Turkish Art Auctions: 2005-2008," Review of Middle East Economics and Finance, De Gruyter, vol. 7(3), pages 1-32, May.
  12. McAfee R. Preston & Vincent Daniel, 1993. "The Declining Price Anomaly," Journal of Economic Theory, Elsevier, vol. 60(1), pages 191-212, June.
  13. R. Ekelund & Rand Ressler & John Watson, 2000. "The ``Death-Effect'' in Art Prices: A Demand-Side Exploration," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 24(4), pages 283-300, November.
  14. Lucio Picci & Antonello Scorcu, 2003. "Bidders' and Sellers' Strategies in Sequential Auctions. New Evidence about the Afternoon Effect," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 30(2), pages 163-178, June.
  15. George Deltas & Georgia Kosmopoulou, 2004. "'Catalogue' vs 'Order-of-sale' effects in sequential auctions: theory and evidence from a rare book sale," Economic Journal, Royal Economic Society, vol. 114(492), pages 28-54, 01.
  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.
  17. Lusht, Kenneth M, 1994. "Order and Price in a Sequential Auction," The Journal of Real Estate Finance and Economics, Springer, vol. 8(3), pages 259-266, May.
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