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.     

Land Artists and Art Markets

This paper focuses on the relations of land artists to the art market.As landworks are by their very nature site specific, what is sold is mostoften the documentation of the project. This paper examines whether there isa market for Land Art and if so, whether it shares the same characteristicsas markets for Minimal and Conceptual Art, which started at about the sametime. Data collected on auctions over the period 1972–1992, show thatthis market is very thin. This was probably realized by Land artists wholater seem to have turned to more marketable creations.     

The value of a good reputation online: an application to art auctions

Using a unique dataset of art auctions on eBay, we conduct an empirical analysis of the value of a seller’s online reputation. Several aspects distinguish our work from most existing research. We analyze a heterogeneous panel data consisting of a large number of observations over a large period of time, including significant variation in reputation across and within sellers. The panel structure of our dataset allows us to employ fixed effects techniques to control for observed and unobserved differences across auctions. Our results point to a highly significant, and sizable, impact of a negative reputation on the behavior of market participants and on market outcomes. Negative feedback is associated with a significant reduction in the number of bidders and a reduction in the probability of sale; negative feedback is also associated with a significant reduction in sale price. Consistent with previous research, the impact of additional positive feedback on market outcomes for the seasoned sellers in our sample is not statistically significant.     

Tribal art market: signs and signals

In this paper, we present a model for the marketability of a Tribal artwork, and we test this model empirically using a unique hand-collected dataset, which comprises the worldwide Tribal art market auctions between 1999 and 2008. Our results show a significant relationship between the probability of an artwork to be sold and several signs and signals. The effect of the auction estimated prices on the probability of sales is nonlinear and allows us to divide the Tribal art market into two price regimes. In the low-price regime, the effect of the auction estimated price on the probability of sales is negative. In the high-price regime, the effect of the auction estimated price on the probability of sales is positive.     

Determinants of Prices for Contemporary Art in Dutch Galleries, 1992–1998

We analyse determinants of prices for contemporary art with the help of quantitative data. The focus is on gallery rather than auction prices in the Netherlands. We model the determinants of prices on three different levels: the work of art (size, material), the artist (age, sex, place of residence, institutional recognition), and the gallery (location, institutional affiliation, age). Our main findings are that the size and material of works of art, and the age and place of residence of the artist are strong predictors of price; that differences in size and materials partly ``mask' price differences between artists; and that the variance in prices across galleries is largely explained by characteristics of the artists they represent.     

Design as Power: Paul Virilio and the Governmentality of Design Expertise

Abstract

Using sources from popular media, and ethnographic data collected from a university‐based urban design studio, I challenge Paul Virilio’s assertion that the modern human condition is dominated by a process of emotional synchronisation based on fear (the result, according to Virilio, of a collusion of technology and speed), and offer the analogous idea that contemporary consumer capitalism works toward a synchronisation of desire, operating, at least in part, through the ideologies and machinations of the idea of design. To do this, I analyse designerly approaches to problem‐solving as potential disciplining forces, or technologies of governmentality, which help to create order by manufacturing certain subjectivities like consumer, community member, or sense‐of‐place – subjectivities that are amenable to neo‐liberal notions of civil society in consumer‐capitalism. Ultimately, I argue that Virilio’s ‘art criticism of technology’, but also common critiques thereof, both depoliticise aesthetic judgement and work together toward the obfuscation of power within the symbolic economy of neo‐liberal consumer capitalism.     

Investment in early American art: the impact of transaction costs and no-sales on returns

Art, along with other “treasure assets,” has become a central object for investment opportunities. Investment return studies using hedonic and resale price regressions on different artistic periods and styles produce estimates of varying rates of return, predominately low rates with high standard deviations. The present study employs a new sample of American art sold at auction between 1987 and 2011—art created before 1950 by 33 artists born prior to 1900. Our study, unlike those that preceded it, considers works that are no-sales (those “bought-in” for failing to sell at auction at or above a predetermined and negotiated minimum price), in addition to full transaction costs—buyers and sellers premia on hammer prices. We conclude that investment return calculations are biased upward and may be negative when these factors are considered and that the “consumption utility” of art may be higher than previously thought. However, using a variant of the capital asset pricing model, we find that investment in early American art may still be desirable in a diversified portfolio of assets for when the price of stock assets falls, the price of art does not fall in the same proportion.     

International Trade in Art

This paper investigates the extent to which trade theory is applicable for explaining trade in art. Reproducible art is distinguished from unique art and it is argued that the trade in reproducible art is, at least in principle, governed by the same economic laws as trade in other differentiated products. However, trade theory needs to be amended in order to account for the addictive character of art consumption: culture specific consumption capital is built up with art consumption. Moreover, trade in unique art is mainly trade between consumers, a phenomenon largely ignored by standard trade theory. Empirical evidence on trade in art is presented and a gravity model of international trade in works of art is estimated. Finally, the paper discusses open questions for future research.     

Perfect reproductions of works of art: Substitutes or heresy?

The paper attempts an empirical investigation into a number of subjective determinants used in the evaluation of a work of art. Individuals' decisions to buy works of art seem based predominantly on aesthetic benefits. This is true for original pieces of art as well as for reproductions, i.e. there seems to be some substitutability between both kinds of objects. Major differences in the evaluation of originals and reproductions arise with respect to the secondary characteristics of art objects, not specifically with regard to the work of art itself. With respect to the willingness to pay (wtp) for a reproduction, a major impact seems to be whether or not the original work exists, i.e. a rationing effect seems to arise. The wtp for a reproduction also seems to depend on whether or not an individual earns his/her income in the arts sector.     

Daily natural heat convection in a historical hall

The use of numerical simulation methods for the Cultural Heritage is of increasing importance for the analysis, conservation, restoration and appreciation of works of art. This is particularly important when their preservation and planned maintenance is the primary aim. Today museums, and particularly historical buildings converted to museums, should be considered as places where precious artefacts should have first-rate protection and conservation. It is a question of solving the compromise between protection, conservation and comfort for works of art and/or visitors, with the consequence that preservation and planned maintenance criteria must prevail over use requirements. Refurbishment and conservation of a building, and requirements for visitor presence and works of art need different thermo-physical indoor parameter values. The present paper concerns the thermal and air velocity analysis of the Salone dei Duecento (the Hall of the Two Hundred of the Palazzo Vecchio (Old Palace)) in Florence. In this paper an appropriate transient 3D model by Computational Fluid Dynamics (CFD) software based on the finite element method (FEM) was used. Variations and interaction between indoor and outdoor microclimatic conditions, and thermo-physical behaviour of the building connected to lighting, visitor presence and cooling–heating fan coils system were considered. The 3D modelling method provided by the present paper can be applied to several situations where there is interaction between outdoor and indoor climate variations and the building structure. It can be very useful for defining measures to preserve tapestries, understanding deterioration processes, and developing new conservation techniques and strategies for care and exhibition.     

Private or Public?

This paper concerns the consequences of subsidizing art production. Once a government offers grants and subsidies, artists can decide between public and private funding. A joint model of this choice-situation and the related earnings is derived. The model is tested for the case of visual artists in the Netherlands. The analyses show that subsidizing artists enhances a winner-takes-all tendency for the market at large. Financial success on both the private and the public market appears to be not particularly related to human capital, but to personal characteristics, government recognition and (unobserved) talents.     

Are Multiple Art Markets Rational?

We advance and subsequently test the proposition thatmarkets for fine art are rational, namely, that, inthe determination of price, traders make use of allrelevant art historical and critical information, asrevealed by hedonic content analysis, as well as allinformation on authenticity of the works offered forsale. If true, the proposition has consequences forpublic policy. Museums optimize choices among art historicallysignificant authentic paintings distributed asstochastic rare events in the tertiary market for art. Such paintings have few, if any, art historicallyequivalent substitutes, causing the demand for suchworks of art to be extremely inelastic. Museums tendto buy at the top of the information curve; payingprices which exceed market averages for similar art. As a result, society pays the cost of institutionalrisk aversion. In contrast, collectors often purchaseart before all art historical information is complete,and often earn a reward for assuming a risk due toincomplete information (Singer, 1991; Pomerhene, 1994).Collectors who can borrow to accumulate the highestcategory art can consume the services of their artcollection at zero cost. Stochastic transferfunctions fitted to time series of sales volume at thetwo top international auction houses confirm thehypothesis that the highest category of art is a quasisubstitute for financial instruments (liquid wealth).     

Price determinants and genre effects in the Korean art market: a partial linear analysis of size effect

This paper examines the price determinants of paintings in the Korean art market in the context of a hedonic price regression to investigate whether the hypothesis of the modified unit pricing system holds for the pricing of Korean modern and contemporary paintings. Using Korean auction data, I show that the parametric results provide overwhelming evidence that Korean art pricing does not function in accordance with the modified unit pricing scale. However, I re-examine this hypothesis using a semiparametric partial linear regression that does not require the prespecification of a functional form prior to estimation. Rather, the semiparametric approach allows the data to determine the exact form of the size-price profile. This result confirms that the modified unit pricing system applies to the Korean contemporary and modern painting market.     

“Better an egg today than a hen tomorrow” on the implications of deaccess policies for donations to museums

Severe budget cuts in the cultural sectors of many countries have spurred disparate suggestions for alternative sources available to public institutions. Deaccessioning may be an option, although controversial, to guarantee the survival of cultural institutions. This paper addresses the consequences that deaccessioning may have on donations of artworks to museums, by developing a sequential game with incomplete information. We investigate the interactions between donors and museums, when the former is uncertain about the commitment of a museum not to deaccess part of its endowment in the future. Our analysis shows that deaccessioning may reduce art donations to museums. Interestingly, public grants to museums cause a negative externality to a committed museum, which experiences a reduction in donations. Results provide intuitions for the widespread resistance to deaccessioning of museum associations, for their efforts to enforce common regulation restricting the use of proceeds to the acquisition of art, and also for the proliferation of private art museums.     

Estimates, Bias and “No Sales” in Latin-American Art Auctions, 1977–1996

Estimate bias and no-sales are investigated in the context of Latin American Art auctions conducted in New York between 1977 and 1996. We find that, using a new method for calculating bias, both Sotheby's and Christie's overestimated art (oil-on-canvas pieces) by 2.7 percent. The inclusion of no-sales raises that proportion to a full one-third of the art traded. Utilizing a binomial probit analysis, moreover, we find that the estimate window is negatively and significantly related to the likelihood of a no sale at auction.     

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.     

On the relationship between reserve prices and low estimates in art auctions

Using a unique hand-collected dataset comprising all auctions held by a major Italian auction house in Italy from 1994 to 1997 and including confidential information on reserve prices, we find empirical evidence in support of several studies in cultural economics literature that reserve prices are set in a range of approximately 75 % of low presale estimates.