Sale Rates and Price Movements in Art Auctions

Orley Ashenfelter and Kathryn Graddy ()

No 16743, NBER Working Papers from National Bureau of Economic Research, Inc

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 to measure normal sale rates. We also find evidence that the reserve price is set on average at about 70% of the auctioneer's low estimate, as published in the auction catalog.

JEL-codes: D44 L1 L82 (search for similar items in EconPapers)
Date: 2011-01
Note: IO
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Citations: View citations in EconPapers (23)

Published as Orley Ashenfelter & Kathryn Graddy, 2011. "Sale Rates and Price Movements in Art Auctions," American Economic Review, American Economic Association, vol. 101(3), pages 212-16, May.

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Related works:
Journal Article: Sale Rates and Price Movements in Art Auctions (2011)
Working Paper: Sale Rates and Price Movements in Art Auctions (2011)
Working Paper: Sale Rates and Price Movements in Art Auctions (2011)
Working Paper: Sale Rates and Price Movements in Art Auctions (2011)
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