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Explaining The Breadth Of Expert Estimate Ranges In Auctions Of Rare Books

  • STUART KELLS
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    This paper uses data from 3144 rare book auctions to study the breadth of auctioneers’ estimate ranges. The ‘information hypothesis’ proposes that wider ranges reflect greater uncertainty. The ‘reserve hypothesis’ proposes that a narrower range indicates a higher reserve price. The information hypothesis is tested by seeing whether estimate breadths are related to the presence of greater information about likely prices. The reserve hypothesis is tested by seeing whether narrower estimate ranges predict ‘no sales’. Evidence is found in support of the information hypothesis but not the reserve hypothesis. The paper identifies differences between the auction houses Christie’s and Sotheby’s in the estimate strategies they adopt.

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    Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 873.

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    Length: 28 pages
    Date of creation: 2003
    Date of revision:
    Handle: RePEc:mlb:wpaper:873
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    1. BAUWENS, Luc & GINSBURGH, Victor, . "Art experts and auctions are pre-sale estimates unbiased and fully informative?," CORE Discussion Papers RP -1485, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Engelbrecht-Wiggans, Richard, 1994. "Sequential auctions of stochastically equivalent objects," Economics Letters, Elsevier, vol. 44(1-2), pages 87-90.
    3. Lusht, Kenneth M, 1994. "Order and Price in a Sequential Auction," The Journal of Real Estate Finance and Economics, Springer, vol. 8(3), pages 259-66, May.
    4. Klemperer, P., 1999. "Auction Theory: a Guide to the Literature," Economics Papers 1999-w12, Economics Group, Nuffield College, University of Oxford.
    5. Paulo Klinger Monteiro & Flavio Menezes, 1999. "Synergies and Price Trends in Sequential Auctions," Microeconomics 9901002, EconWPA, revised 03 Feb 1999.
    6. Victor Ginsburgh & Pierre-Michel Menger, 1996. "Economics of the arts: selected essays," ULB Institutional Repository 2013/1655, ULB -- Universite Libre de Bruxelles.
    7. 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.
    8. Paul Milgrom & Robert J. Weber, 1981. "A Theory of Auctions and Competitive Bidding," Discussion Papers 447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    9. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer.
    10. Laffont, J.J., 1996. "Game Theory and Empirical Economics: The Case of Auction Data," Papers 95.394, Toulouse - GREMAQ.
    11. McAfee R. Preston & Vincent Daniel, 1993. "The Declining Price Anomaly," Journal of Economic Theory, Elsevier, vol. 60(1), pages 191-212, June.
    12. Stuart Kells, 2002. "The Australian Book Auction Records," Department of Economics - Working Papers Series 830, The University of Melbourne.
    13. Black, Jane & De Meza, David, 1992. "Systematic Price Differences between Successive Auctions Are No Anomaly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(4), pages 607-28, Winter.
    14. Engelbrecht-Wiggans, Richard & Kahn, Charles M., 1999. "Calibration of a model of declining prices in cattle auctions," The Quarterly Review of Economics and Finance, Elsevier, vol. 39(1), pages 113-128.
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