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Sale Rates and Price Movements in Art Auctions

  • Orley Ashenfelter

    (Princeton University)

  • Kathryn Graddy

    (Department of Economics, Brandeis University)

This paper examines the relationship between sale rates and price shocks in art auctions. Using data on contemporary and impressionist art, we show that while sale rates appear to have little relationship to current prices, there exists a strong negative relationship of sale rates to unexpected price shocks, which is reminiscent of a Phillips curve. We estimate an empirical model that suggests that the reserve price is set on average at about 70% of the low estimate.

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File URL: http://www.brandeis.edu/departments/economics/RePEc/brd/doc/Brandeis_WP23.pdf
File Function: First version, 2011
Download Restriction: no

Paper provided by Brandeis University, Department of Economics and International Businesss School in its series Working Papers with number 23.

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Length: 13 pages
Date of creation: Jan 2011
Date of revision:
Handle: RePEc:brd:wpaper:23
Contact details of provider: Postal: MS032, P.O. Box 9110, Waltham, MA 02454-9110
Web page: http://www.brandeis.edu/departments/economics/

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  1. 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.
  2. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer.
  3. Madeleine DE LA BARRE & Sophie DOCCLO & Victor GINSBURGH, 1994. "Returns of Impressionist, Modern and Contemporary European Paintings 1962-1991," Annales d'Economie et de Statistique, ENSAE, issue 35, pages 143-181.
  4. Orley Ashenfelter & Kathryn Graddy, 2010. "Art Auctions," Working Papers 1212, Princeton University, Department of Economics, Center for Economic Policy Studies..
  5. Madeleine de la Barre & Sophie Docclo & Victor Ginsburgh, 1994. "Returns of impressionist, modern and contemporary European painters, 1962-1991," ULB Institutional Repository 2013/1723, ULB -- Universite Libre de Bruxelles.
  6. Pesando, James E, 1993. "Art as an Investment: The Market for Modern Prints," American Economic Review, American Economic Association, vol. 83(5), pages 1075-89, December.
  7. Goetzmann, William N, 1993. "Accounting for Taste: Art and the Financial Markets over Three Centuries," American Economic Review, American Economic Association, vol. 83(5), pages 1370-76, December.
  8. Clare McAndrew & James L Smith & Rex Thompson, 2012. "The impact of reserve prices on the perceived bias of expert appraisals of fine art," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(2), pages 235-252, 03.
  9. Kathryn Graddy & Orley Ashenfelter, 2002. "Auctions and the Price of Art," Economics Series Working Papers 131, University of Oxford, Department of Economics.
  10. Mortensen, Dale T, 1970. "Job Search, the Duration of Unemployment, and the Phillips Curve," American Economic Review, American Economic Association, vol. 60(5), pages 847-62, December.
  11. 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.
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