Art Market Inefficiency

Geraldine David, Kim Oosterlinck and Ariane Szafarz

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: Art is often used as an investment vehicle. Given the importance of market efficiency in finance, we use a large auction-based index to test whether the art market is weakly efficient. Evidence reveals that returns on artworks exhibit high positive auto-correlation. We attribute this result to price truncation resulting from unobservable reserve prices in auctions. We conclude that the art market is not efficient, mainly because price formation is opaque to outsiders who lack information on unsold artworks.

JEL-codes: D44 D84 G12 G14 Z11 (search for similar items in EconPapers)
Date: 2013-10
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Citations: View citations in EconPapers (30)

Published in: Economics letters (2013) v.121,p.23-25

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Journal Article: Art market inefficiency (2013)
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