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A Model for Pricing the Italian Contemporary Art Paintings at Auction

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  • Nicoletta MARINELLI

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

  • Giulio PALOMBA

    ([n.a.])

Abstract

This paper aims to model the auction prices of Italian contemporary art paintings. The contribution to the existing literature is twofold concerning both the methodological and the conceptual aspects. From the former point of view, we use the two-stages Heckit model which allows us to take into account the sample selection bias deriving from the "buying" risk, that affects transactions at auction. From the latter point of view, we have found that some sale characteristics such as auction house prestige and year of sale, are more important than the physical aspects of the paintings. Moreover, some artistic characteristics, the artist's name and their living status are also relevant. An estimation using pre-sale evaluation by experts has also been tried: this explanatory variable seems to be the main driver regarding both the probability of having an unsold painting and the auction price levels reached by sold works. Nevertheless, the hypothesis of its sufficiency is rejected and some problems related to the economic interpretation of the results arise. The whole analysis is carried out after creating a new dataset of 2817 transactions which took place at the most important auction houses between 1990 and 2006.

Suggested Citation

  • Nicoletta MARINELLI & Giulio PALOMBA, 2008. "A Model for Pricing the Italian Contemporary Art Paintings at Auction," Working Papers 316, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    • Handle: RePEc:anc:wpaper:316
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    More about this item

    Keywords

    Heckit model; auctions; painting prices; selection bias; statistical sufficiency;
    All these keywords.

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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