Title
Sale Rates and Price Movements in Art Auctions
Author(s)
Orley Ashenfelter Orley Ashenfelter (Princeton University)
Kathryn Graddy Kathryn Graddy (Brandeis University)
Abstract
The failure of many paintings to sell in art auctions indicates the presence of reserve prices set by sellers. This paper examines the relationship between sale rates and price surprises over time 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 positive relationship of sale rates to unexpected aggregate price changes, which is reminiscent of a Phillips curve. As a result, sale rates provide a useful quantity indicator of the strength of the art market. The data also indicate that sale rates revert to normal very quickly following a price surprise. We estimate an empirical model that suggests that the reserve price is set on average at about 70% of the auctioneer?s low estimate as published in the auction catalog.
Creation Date
2011-01
Section URL ID
CEPS
Paper Number
214
URL
https://gceps.princeton.edu/wp-content/uploads/2017/01/214ashenfelter.pdf
File Function
Jel
Z110, D120, D440
Keyword(s)
art, auctions, reserve prices, sale rates
Suppress
false
Series
3