Bidding and prices for online art auctions: sofa art or investment

The article uses auction data collected from the eBay internet site to examine the effect of various parameters on number of bids and selling price of art. The article further uses an insight from the auction literature to gather evidence about whether art on eBay is purchased for consumption or investment purposes. The article argues that the evidence found of a positive relationship between the number of bids and the final price suggests that art sold on eBay is not, in general, investment art.      

Failure to meet the reserve price: the impact on returns to art

This article presents an empirical study of paintings that have failed to meet their reserve price at auction. In the art trade, it is often claimed that when an advertised item goes unsold at auction, it will sell for less in the future. We have constructed a new dataset specifically for the purpose of testing this proposition. To preview our results, we find that paintings which come to auction and failed return significantly less when they are eventually sold than those paintings that have not been advertised at auction between sales. These lower returns may occur because of common value effects, idiosyncratic downward trends in tastes, or changes in the seller’s reserve price.

On the return of art investment return analyses

We survey more than twenty studies estimating rates of return of investments in single art objects and whole collections and evaluate the various approaches to art price movements taken so far. The majority of the estimates find lower returns for investments in art objects than for investments in financial assets. However, most existing analyses are restricted to auction data and neglect transactions cost and taxation. They partly focus on mechanistic calculations and disregard the distinguishing institutional and behavioral characteristics of art markets. We look into the possibilities to capture and empirically estimate psychic returns from owning art.     

Senses and artifacts in market transactions: the Korean case of agricultural produce auctions

This article examines the relationship between the senses, artifacts, and trade at South Korean agricultural produce auctions. It explores the impacts of market devices on sensory interactions between auctioneers and buyers that are essential to market transactions. Through ethnographic interviews and participant observations at Garak Market, Seoul, this study compares hand signal trading with electronic trading in agricultural produce auctions. It analyzes how the senses affect auction price estimation and formation, as well as their contribution to economic agency and social relationship among economic actors. The study then examines the impact of new market devices in electronic trading (e.g. trading screens, computer monitors, and wireless bidding terminals) on trading’s sensory aspects of seeing or hearing. It argues that the devices change the modality of sensory interactions between auctioneers and buyers. This transforms power struggles, forming a looser but more equal relationship between auctioneers and buyers and decreasing the overall auction price in the market.     

Institutional anomalies in the contemporary art market

This paper analyses two anomalies of the contemporary art market and the institutions created in order to allow the market to develop. The first anomaly concerns the incomplete specification of property rights in the market of successful artists. The second one originates with the lack of credibility, or time consistency, that characterises the relationships between young artists and gallery owners.     

Public choice in the tertiary art market

InMaking the Mummies Dance, Thomas Hoving, former director of the Metropolitan Museum of Art, articulates a blistering defense of his, admittedly minority, view; namely, that trading directly with dealers when selling deaccessioned works of art or adding to museum collections is preferable to buying and selling in the open auction market (Hoving, 1992). Hoving has been severely criticized for his trades during his tenure at the Metropolitan, as well as for his assessment of the market for fine arts, which runs counter to the prevailing views held by many American public officials, professional art critics and museum boards. We shall present a theoretical model in support of Hoving's argument that trades made at auctions may not serve the public interest. We shall also statistically investigate the stochastic processes which characterize the tertiary art market.     

Rivalry and externalities in secondary art markets

Summary As is the case with other field theories, Urban Economics, Environmental Economics, etc. the microeconomics of the arts attempts to derive a set of particular propositions from the general propositions of Economic Theory. In the process a substantial amount of cross-fertilization takes place. The specific characteristics of art markets require modification or amplification of some general propositions of economic theory, which in turn may offer novel and possibly useful insights as well as testable hypotheses. The following propositions appear to emanate from the present paper.In general markets R & D efforts are directed towards product or process innovation. For the most part, a known consumer technology exists. Innovation in art markets involves product creation as well as the creation of a consumer technology capable of deriving satisfaction from consumption of the new product. In open markets, a non-patentable product would entail excessive free ridership. Such a state of affairs may discourage innovation. Primary sellers would tend to adapt to narrowly changing consumer technologies. Such was the case during most of art history up to the late 19th century. At present, museums and art critics act as quasi patent offices, which fosters innovation by assuring a positive sum game.A new consumer technology is expected to be demand-augmenting. Not necessarily in the sence of McCain [12] where discontinuous jumps in demand are postulated. Even if such shifts were to occur in individual demand curves, market demand will nevertheless be continuous. The present model presumes that the augmentation is mostly due to increasing numbers of art buyers entering as the new consumer technology casues substitution of one style for another (or one fad for another). Syndicate behavior is induced by the winners of the race who have successfully established a new consumer technology and subsequently extend an umbrella over the membership. In this manner the spoils are shared more equitably. This is a peculiarly modern phenomenon. In the past one could not put a Teniers above a Rembrandt or a Polidoro above a Raphael. The generally accepted rules of decorativeness, that is, craftmanship and composition were obvious and immediately perceptible by all.In certain instances syndicate behavior favors single leadership by an established dealer, or a small group of dealers with a proven track record in spawning new technologies. Collectors, too, are involved, by overpaying for art. The discovering collector creates entry barriers for other collectors and thus has a monopoly of discovery of purely intellectual appeal art. Followers may opt to reduce their rivalry in exchange for assurances that once the new technology is in place, they will be given the opportunity to recycle the art brought into being by the leader or leaders. Under certain conditions, as analyzed in the foregoing, this constitutes an optimal strategy.As in the classical case, entry reduces investment and drives rents to zero, if each firm invests a roughly equivalent amount in support of the prevailing consumer technology. There arises the limiting case, equivalent to pure competition (see EQ. 10). On the other hand, several counterveiling strategies are possible. For example, overpayment, as in the case of Rothko. This limits the artists' output in the market. Leftover art is donated or acquired by museums. Such art is no longer competitive, as opposed to art held by other collectors, which, diminishes art'sscarcity value.The most probable outcome of a Cournot-Stackelberg type behavior is a succession of leader-follower or leader-recyler type syndicates, each successively dissolving as new consumer technologies replace old ones. It is, of course, possible for several specialized syndicates to operate contemporaneously. The rate of turnover clearly depends on the speed of dissemination of information. The curator, critic, trustee, consultant has a vested interest in episodic art and an spawning new consumer technologies: if this were not so, there would be no need for the pre-eminance of the critic. He is the magician, the priest, the medicine man who knows the secret language and penetrates the mysteries.     

From Van Gogh's museum to the temple at bassae: heidegger's truth of art and schapiro's art history

This essay revisits Meyer Schapiro's critique of Heidegger's interpretation of Van Gogh's painting of a pair of shoes in order to raise the question of the dispute between art history and philosophy as a contest increasingly ceded to the claim of the expert and the hegemony of the museum as culture and as cult or coded signifier. Following a discussion of museum culture, I offer a hermeneutic and phenomenological reading of Heidegger's ‘Origin of the Work of Art’ and conclude by taking Heidegger's discussion of the strife between earth and world to the site of the ancient temple of Apollo Epicurius at Bassae as an example of the insistent foreclosure of the ancient work of art and the conflicts of the pervasive efforts of modern conservation.     

The relationship between reviewer judgments and motion picture success: re-analysis and extension

The relationship between the judgments of professional reviewers and the economic success of cultural products, such as motion pictures, has been the topic of controversial debates involving both scholars and industry experts. This study builds on previous research that distinguishes an ??influencer effect?? of reviews from a ??predictor effect.?? By empirically separating consumers?? and reviewers?? perceptions of movie quality through an auxiliary regression approach (and thus effectively controls for consumers?? quality perceptions), this study advances the discussion by investigating whether and how isolated reviewer quality perceptions are associated with box office results. The authors empirically test a non-linear effect of reviewers?? quality perceptions on box office returns, including a comprehensive investigation of the moderating forces of this relationship, using regression and simple slope analyses. Data from all 1,370 narrative films released in the United States between 1998 and 2006 reveal that though the short-term box office generally is not influenced by isolated reviewer quality perceptions, a non-linear relationship exists between reviews and long-term box office returns, such that films rated highly by reviewers are more strongly influenced than those that are not. In terms of moderators, the authors find evidence for several arthouse and mainstream characteristics to moderate the relationship between isolated reviewer quality perceptions and box office results.     

Selection processes and appropriability in art,science and technology

Recently, there has been a mutually beneficial interchange of models and ideas between the sociology of science and the economics of technological innovation. Concepts such as the paradigm and the network seem to lend themselves to useful application in both fields. To these is added the concept of the selection system. The major aim of this paper is to show that the development of the arts can be described using the same conceptual framework. This allows the development of hypotheses concerning the relationship between art, science and technology, and also about the effect of appropriability conditions.     

Donor governance and financial management in prominent US art museums

I study “donor governance,” which occurs when contributors to nonprofit firms place restrictions on their gifts to limit the discretion of managers. In a study of US art museums, I find that this practice has grown significantly in recent years, and it represents the largest source of permanent capital in the industry. When donor restrictions are strong, museums shift their cost structures away from administration and toward program services, and they exhibit very high savings rates, retaining in their endowments 45 cents of each incremental dollar donated. Retention rates are near zero for cash generated from other activities. Restricted donations appear to stabilize nonprofits and significantly influence their activities, but they reduce management flexibility and may contribute to lower profit margins. Rising donor governance in US art museums may represent a reaction by contributors to the industry’s high rates of financial distress, weak boards of trustees, and large private benefits of control enjoyed by managers.