On the allocation of talents in the contemporary art market

Luigi Di Gaetano (), Isidoro Mazza () and Anna Mignosa ()
Additional contact information
Anna Mignosa: University of Catania

Journal of Cultural Economics, 2019, vol. 43, issue 1, No 5, 143 pages

Abstract: Abstract This paper investigates the selection of artists by a gallery in presence of adverse selection and moral hazard. Artists have heterogeneous creativity and are divided into two groups: those who innovated and those who did not. Artists reveal their type by participating in an auction where the employer offers a menu of contracts specifying output and wage. When the gallery has monopolistic power, price is set to give a premium to innovation. Thus, when that gallery has to choose between two low-creativity artists, it hires the artist who innovated, in a Bayesian Nash equilibrium. In contrast, a gallery with little market power facing the same alternative hires the artist who did not innovate because it cannot exploit the innovation premium. This result indicates that a segmented market with gatekeeping, in which some artists have no opportunity to bid and join a top gallery, has a negative impact on innovation. The analysis also shows that “superstar” artists (combining creativity with innovation) are more likely to end in top galleries. On the contrary, young talented (creative) artists are relatively more frequently found in galleries with little market power.

Keywords: Art galleries; Artist selection; Adverse selection; Moral hazard; Bayesian equilibrium (search for similar items in EconPapers)
JEL-codes: C72 D82 D86 L14 Z11 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://link.springer.com/10.1007/s10824-018-9331-7 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jculte:v:43:y:2019:i:1:d:10.1007_s10824-018-9331-7

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10824/PS2

DOI: 10.1007/s10824-018-9331-7

Access Statistics for this article

Journal of Cultural Economics is currently edited by Federico Etro and Douglas Noonan

More articles in Journal of Cultural Economics from Springer, The Association for Cultural Economics International Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().