Auction House Guarantees for Works of Art

Jonathan Hamilton and Kathryn Graddy ()

No 9996, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Auction houses use both in-house and third-party guarantees for sellers who are concerned about the risk that not enough bidders will enter the auction for their works. Auction houses are compensated for guarantees by buyers? commissions and successful sales after attracting important works of art. Sellers compensate third-party guarantors by splitting the excess of the final sale price over the guarantee. The guarantor can bid in the auction, and at Christie's, the third-party guarantor still receives a share of the difference between the winning price and the guarantee price, even if he wins the auction, which means the guarantor has a ?toehold?. We explore the effect of guarantees (both in-house and third-party) on prices in art auctions, using a large database of auctions and a smaller database of repeat sales.

Keywords: Economics of art; Price guarantees; Toeholds in auctions (search for similar items in EconPapers)
JEL-codes: D44 L82 Z11 Z18 (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-cul and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Auction House Guarantees for Works of Art (2014)
Working Paper: Auction House Guarantees for Works of Art (2014)
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