The winner's curse on art markets
- We investigate the effect of overreaction in the fine art market. Using a unique sample of auction prices of modern prints, we define an overvalued (undervalued) print as a print that was bought for a price above (below) its high (low) auction pricing estimate. Based on the overreaction hypothesis, we predict that overvalued (undervalued) prints generate a negative (positive) excess return at a subsequent sale. Our empirical findings confirm our expectations. We report that prints that were bought for a price 10 percent above (below) its high (low) pricing estimate generate a positive (negative) excess return of 12 percent (17 percent) after controlling for the general price movement on the prints market. The price correction for overvalued (undervalued) prints is more pronounced during recessions (expansions).
| Author: | Roman KräusslORCiDGND, Elizaveta Mirgorodskaya |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-427461 |
| URL: | https://www.ifk-cfs.de/fileadmin/downloads/publications/wp/2016/CFS_WP_564.pdf |
| Parent Title (English): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 564 |
| Series (Serial Number): | CFS working paper series (564) |
| Publisher: | Center for Financial Studies |
| Place of publication: | Frankfurt, M. |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2017 |
| Year of first Publication: | 2017 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2017/01/24 |
| Tag: | art market; auction; overreaction; pricing estimates; repeat sale; winner's curse |
| Issue: | September 2016 |
| Page Number: | 38 |
| HeBIS-PPN: | 399355278 |
| Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
| Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Deutsches Urheberrecht |
