Working Paper: CEPR ID: DP6806
Authors: Nauro F. Campos; Renata Leite Barbosa
Abstract: This paper uses a unique data set of Latin American paintings auctioned by Sotheby's between 1995 and 2002 to investigate several puzzles from the recent auctions literature. Our results suggest that: (1) the reputation of an artist and the provenance of the artwork, omitted variables in most previous studies, seem to be more important determinants of the sale price of a painting than standard factors, such as medium and size, (2) the opinion of art experts seems to be of limited use in predicting whether or not an artwork sells at auction, (3) there is little supporting evidence for the widespread notion that the best or more expensive artworks tend to generate above average returns (the "masterpiece effect"), although (4) there is strong evidence in our data for the declining price anomaly, or "afternoon effect."
Keywords: art auctions; declining price anomaly; latin american art; masterpiece effect
JEL Codes: D44; G11; L12; Z10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| artist reputation (Z11) | sale price (D49) |
| provenance (P26) | sale price (D49) |
| expert opinion (C90) | sale probability (D44) |
| masterpiece effect (Y60) | average returns (G12) |
| auction timing (D44) | hammer price (D44) |