Art Auction Market Research Articles

Misattribution stigma and contagion: How did the art auction market react to Australian “Black art scandals”?

AbstractIn 1999, two major stories hit the media concerning the authenticity of artworks by two of Australia’s leading Indigenous artists. The incidents were quickly tagged as ‘Black art scandals’, with the artists disavowing production of the artworks in question. We theorize the market impacts using the lens of stigma, given that, in the art market, uncovering fakes and forgeries may create a panic among buyers of an artist. Our proposed mechanism is that negative media attention about works misattributed to an artist stigmatizes the artist’s name and their artworks. We also note the potential stigma transfer to other artists in a style or genre (category-level contagion). Our results show a decline in the clearance rate and some weak evidence of a fall in the value of sales for auctions occurring after the news stories broke. We suggest stigma as a lens for future work in cultural economics.

Contemporary art from the Global South in the art auction market from 2020 to 2022

In recent years, emerging artists from the Global South have garnered substantial attention in the art market. This study seeks to examine the market value and ecosystem evolving around these emerging artists by analyzing the sales results of 51 artists between 2020 and 2022. This research aims to establish patterns linking unprecedented sales results with exhibition history and highlights the essential network required for these artists’ commercial success. The study reveals that the emergence of artists in the global art market results from a deliberate effort by a network of stakeholders. Our exhibition database led us to a group of 438 stakeholders who promote this sample of artists. By examining artists’ origins, backgrounds, and careers, this study provides context for analyzing the impact of artistic migration on artists’ visibility, the importance of being promoted by a variety of specialists, and the surge of African artists in the global art market since 2020. Our findings indicate that the structure of the art world has shifted toward a decentralized global art market characterized by a diverse range of actors and inputs dispersed globally. This diversification has disrupted traditional power structures in the art world, opening up new possibilities for emerging artists from the Global South, thereby contributing to a more equitable and inclusive art market.

A Few Notes on Auctions: The Boom in the Asymmetric Art Auction Market

A Few Notes on Auctions: The Boom in the Asymmetric Art Auction Market

‘The Lucky Country’: How the COVID-19 Pandemic Revitalised Australia’s Lethargic Art Market

Since its publication in 1964, Australians have used the title of Donald Horne’s book, The Lucky Country, as a term of self-reflective endearment to express the social and economic benefits afforded to the population by the country’s wealth of geographical and environmental advantages. These same advantages, combined with strict border closures, have proven invaluable in protecting Australia from the ravages of the global COVID-19 pandemic, in comparison to many other countries. However, elements of Australia’s arts sector have not been so fortunate. The financial damage of pandemic-driven closures of exhibitions, art events, museums, and art businesses has been compounded by complex government stimulus packages that have excluded many contracted arts workers. Contrarily, a booming fine art auction market and commercial gallery sector driven by stay-at-home local collectors demonstrated remarkable resilience considering the extraordinary circumstances. Nonetheless, this resilience must be contextualised against a decade of underperformance in the Australian art market, fed by the negative impact of national taxation policies and a dearth of Federal government support for the visual arts sector. This paper examines the complex and contradictory landscape of the art market in Australia during the global pandemic, including the extension of pre-pandemic trends towards digitalisation and internationalisation. Drawing on qualitative and quantitative analysis, the paper concludes that Australia is indeed a ‘lucky country’, and that whilst lockdowns have driven stay-at-home collectors to kick-start the local art market, an overdue digital pivot also offers future opportunities in the aftermath of the pandemic for national and international growth.

Colors, Emotions, and the Auction Value of Paintings

We study pricing in the art auction market, focusing on the impact of color composition in non-figurative paintings on hammer prices and willingness-to-pay, by means of both field and laboratory data. Our field data, consisting of art auction prices, reveal a color hierarchy reflected in hammer prices: a one standard deviation increase in the percentage of blue (red) hue triggers a premium of 10.63% (4.20%). We conducted laboratory experiments in the US, China, and Europe, and elicited participants’ willingness-to-pay and measured emotions. We find that blue and red paintings command a premium: blue (red) paintings generate 18.57% (17.28%) higher bids. Color influences prices through the channel of emotional pleasure rather than arousal. Our results are consistent across all three cultures and independent of individual traits such as gender, risk aversion, education and cultural background.

Attribution Stigma and Contagion: How Did the Art Auction Market React to Australian “Black Art Scandals”?

Attribution Stigma and Contagion: How Did the Art Auction Market React to Australian “Black Art Scandals”?

Investment Returns and Economic Fundamentals in International Art Markets

Works of art are neither easily tradable across borders, nor evaluated according to globally identical standards. We examine geographical segmentation and its effects on price formation and returns in the international art auction market. We find (i) a close connection between the country of sale and the type (e.g., nationality) of artworks sold; (ii) substantial international variation in average returns to art investments over the period 1971-2007; (iii) an impact of both global and local GDP growth and equity returns on national art market returns. Local fundamentals have not lost importance over time, despite increased economic integration (especially between the EU countries). Yet, country-specific economic factors matter less in determining the auction outcomes for high-end art. Our findings suggest the continuing importance of international demand differences in shaping the global art market, at least outside the top segment.

Art investment: hedging or safe haven through financial crises

We analyze long-term art auction sales data focusing on and around financial crisis periods with other investment returns to understand whether art can be considered a safe haven during volatile times or a hedging option in general by analyzing art auction data in a volatile emerging market. Our findings suggest Turkish art returns are either negatively correlated or at low correlation with other investments, including the equity market. We have the view that art can be considered a hedging mechanism on average to enhance returns and to decrease the risk of portfolios and improve diversification. However, we do not discard the safe-haven hypothesis, either. Although the auction data on the crisis period is limited, results of and around crisis periods show art returns are positively correlated with various volatility indices. In addition, the number of art transactions also increases after the crisis years, which may be a sign of liquidity requirement of some investors and an opportunity for buyers. The benefit is visible especially during years of contractions, which do not end with a very severe crisis, since the art auction market liquidity dries if the crisis is severe.

Art in Africa: Hedonic price analysis of the South African fine art auction market, 2009–2014

Real asset markets are characterized by illiquidity and heterogeneous assets, presenting challenges to price estimators. Use of a new dataset of 7,553 auction fine art lots brought to market in South Africa, for 2009–14, allows us to examine the full sales hedonic price estimator over a wide set of characteristics. Results validate full sale hedonic pricing: Identities of artists, medium and genre, dating characteristics, and physical characteristics of artwork are significant. External validity of hedonic pricing is supported by out-of-sample price prediction for 40 individual artists. Auction house catalogue presentation of art work also proves correlated with realized auction prices. Art as an asset finds support: art prices move countercyclically with GDP and domestic equity markets, pro-cyclically with off-shore equity markets, implying a risk diversification role. JEL Codes: D1, L8. Keywords: hedonic price equation, art market, South Africa Word Count: 9467 (including all Tables, Figures, References).

Machines and Masterpieces: Predicting Prices in the Art Auction Market

We study the accuracy and usefulness of automated (i.e., machine-generated) valuations for illiquid and heterogeneous real assets. We assemble a database of 1.1 million paintings auctioned between 2008 and 2015. We use a popular machine-learning technique - neural networks - to develop a pricing algorithm based on both non-visual and visual artwork characteristics. Our out-of-sample valuations predict auction prices dramatically better than valuations based on a standard hedonic pricing model. Moreover, they help explaining price levels and sale probabilities even after conditioning on auctioneers' pre-sale estimates. Machine learning is particularly helpful for assets that are associated with high price uncertainty. It can also correct human experts' systematic biases in expectations formation - and identify ex ante situations in which such biases are likely to arise.

Colors, Emotions, and the Auction Value of Paintings

We study the impact of colors of paintings on prices in the art auction market and incorporate color attributes of non-figurative paintings in pricing models. A one standard deviation increase in the percentages of blue (red) hue leads to premiums of 10.63% (4.20%). We also conduct laboratory experiments in China, the Netherlands, and U.S., and elicit participants’ willingness-to-pay and emotions (pleasure-arousal). Blue (red) paintings command 18.57% (17.28%) higher bids and stronger intention to purchase. Although abstract art is visually arousing, it is the emotional pleasure channel that relates colors and prices. Our results are consistent across all three cultures.

A Study on the Korean Art Auction Market System

A Study on the Korean Art Auction Market System

Der Berliner Kunstmarkt: An Analysis of the Berlin Art Market, 1930–1945

The authors investigate Berlin’s art auction market as it developed between 1930 and 1945. By analyzing Berlin’s auction data from the Getty Research Institute’s recently published database of German auction sales catalogs dating from 1930 to 1945, this paper explores the Third Reich’s influence on the Berlin fine art auction market. The analysis is separated into two main categories: the overall market and the auction houses, in particular a close examination of the auction houses Graupe and Lange. Key findings include the inverse relationship between median selling price and the number of paintings sold over several years, indicating that paintings sold in Berlin during this time functioned more like normal goods rather than luxury items; the interconnected relationship between the ownership and operations of many auction houses, including Graupe’s transition to Lange after fleeing from anti-Semitism in Berlin; and the evidence that stolen artwork was auctioned for sale on several occasions, with most of the proceeds benefitting Hitler’s Nazi regime.[This article is a revision of the paper that won the 2018 Sotheby’s Institute of Art Research Award. The award recognizes excellence in a student paper or digital art history project on a topic relevant to collecting or the art market. This paper was presented as part of the “New Voices in the Profession” panel at the ARLIS/NA conference held in New York, New York, in February 2018.]

Analysis of the Pricing effect due to Improvement of Awareness in Art market - focusing on the case of Dansekhwa in Korean art auction market

Analysis of the Pricing effect due to Improvement of Awareness in Art market - focusing on the case of Dansekhwa in Korean art auction market

A Model of Trading in the Art Market

We present an infinite-horizon model of endogenous trading in the art auction market. Agents make purchase and sale decisions based on the relative magnitude of their private use value in each period. Our model generates endogenous cross-sectional and time-series patterns in investment outcomes. Average returns and buy-in probabilities are negatively correlated with the time between purchase and resale (attempt). Idiosyncratic risk does not converge to zero as the holding period shrinks. Prices and auction volume increase during expansions. Our model finds empirical support in auction data and has implications for selection biases in observed prices and transaction-based price indexes. (JEL C43, D44, E32, Z11)

A Note on the Chinese Artists and the Art Auction Market

A Note on the Chinese Artists and the Art Auction Market

The Portuguese Contemporary Art Auction Market Between 2008 and 2011

The purpose of this study is to understand how the Portuguese auction market for contemporary art reacted to the global crisis following the collapse of Leh man Brothers investment bank in September 2008. By studying the records fro m some major auction houses in the country it is possible to understand the movement o f this market between 2008 and 2011, and to compare it with the international auction market. Th is study shows that the Portuguese auction market for contemporary art fo llo wed a different path fro m the international market, facing a longer period of recovering.

The impact of the Droit de Suite in the UK: an empirical analysis

The Droit de Suite, known in the UK as Artists’ Resale Rights, provides an artist with the inalienable right to receive a royalty based on the resale price of an original work of art. This paper provides an empirical analysis of actual changes in the UK auction market for art that is newly subject to the Droit de Suite (DDS) because of a change in law. All changes are measured relative to changes for art not subject to the DDS and relative to changes in the auction markets for art in countries where there has been no change in law. We do a difference-in-difference analysis, differencing price growth and sales growth across market segments and across countries over the period 1993–2007. Our results suggest that the introduction of the DDS has not had a consistent negative impact on the UK art auction market during the period of study.

Evidence of Auction House Influence Over Buyer Behaviour and Price Formation in the Australian Art Auction Market

During the last six months, there has been much discussion in the general and arts media about the manifestation of problematic practices within the Australian art auction market. Although the nature of these practices has been scrutinised, scant attention has been paid to how the methods and mechanisms employed by auction houses to build business during the art market boom that commenced in the late 1990s might represent a force that could undermine the sustainability of the market. Fundamental to this is quantifying the extent to which auction houses are able to influence market development. In this paper, I present empirical evidence that suggests that major Australian auction houses can exert significant control over buyer behaviour and price formation.

Price efficiency in the art auction market

Recent developments in the art marketing community have attracted substantial media attention. Most of these changes are associated with attempts to put the art world on a more "business-like" footing. Auction houses have gone through a round of acquisition and combination in recent years. New ownership at $otheby's has made an effort to reach a wider audience and involve new collectors in the art auction market.(1) This article reports on a study of the price-setting process for auctions of Americana by $otheby's New York auction rooms in 1989 and 1990.(2) The purpose of the research was to determine the nature and efficiency of the price-setting process under these conditions of new ownership and increased participation in these markets. The study focused on Americana, a relatively new area of interest for art collectors. We chose Americana because it is can be considered analogous to "small capitaliTxtion" stocks in the securities world. Fewer analysts follow Americana compared to other types of art. The implications of these conditions are discussed in a later section.