NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Sale Rates and Price Movements in Art Auctions

Orley C. Ashenfelter, Kathryn Graddy

NBER Working Paper No. 16743
Issued in January 2011
NBER Program(s):   IO

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.

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Document Object Identifier (DOI): 10.3386/w16743

Published: 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. citation courtesy of

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