Journal of Cultural Economics

, Volume 43, Issue 1, pp 121–143 | Cite as

On the allocation of talents in the contemporary art market

  • Luigi Di GaetanoEmail author
  • Isidoro Mazza
  • Anna Mignosa
Original Article


This paper investigates the selection of artists by a gallery in presence of adverse selection and moral hazard. Artists have heterogeneous creativity and are divided into two groups: those who innovated and those who did not. Artists reveal their type by participating in an auction where the employer offers a menu of contracts specifying output and wage. When the gallery has monopolistic power, price is set to give a premium to innovation. Thus, when that gallery has to choose between two low-creativity artists, it hires the artist who innovated, in a Bayesian Nash equilibrium. In contrast, a gallery with little market power facing the same alternative hires the artist who did not innovate because it cannot exploit the innovation premium. This result indicates that a segmented market with gatekeeping, in which some artists have no opportunity to bid and join a top gallery, has a negative impact on innovation. The analysis also shows that “superstar” artists (combining creativity with innovation) are more likely to end in top galleries. On the contrary, young talented (creative) artists are relatively more frequently found in galleries with little market power.


Art galleries Artist selection Adverse selection Moral hazard Bayesian equilibrium 

JEL Classification

D82 D86 Z11 C72 L14 


Compliance with ethical standards

Conflict of interest

The authors declare that they have no conflict of interest.


  1. Amabile, T. M. (1988). A model of creativity and innovation in organizations. Research in Organizational Behavior, 10(1), 123–167.Google Scholar
  2. Bakhshi, H., & Throsby, D. (2009). Innovation in arts and cultural organisations. Hamburg: NESTA.Google Scholar
  3. Bassett-Jones, N. (2005). The paradox of diversity management. Creativity and Innovation, Creativity and Innovation Management, 14, 160–175.CrossRefGoogle Scholar
  4. Billot, A. (2012). Economic theory of fuzzy equilibria: An axiomatic analysis. Berlin: Springer.Google Scholar
  5. Bryant, W. D., & Throsby, D. (2006). Creativity and the behavior of artists. Handbook of the Economics of Art and Culture, 1, 507–529.CrossRefGoogle Scholar
  6. Butnariu, D. (1978). Fuzzy games: A description of the concept. Fuzzy Sets and Systems, 1(3), 181–192.CrossRefGoogle Scholar
  7. Castaner, X., & Campos, L. (2002). The determinants of artistic innovation: Bringing in the role of organizations. Journal of Cultural Economics, 26, 29–52.CrossRefGoogle Scholar
  8. Caves, R. (2000). Creative industries. Cambridge: Harvard University Press.Google Scholar
  9. Cellini, R., & Cuccia, T. (2003). Incomplete information and experimentation in the arts: A game theory approach. Economia Politica, XX, 21–34.Google Scholar
  10. Cerisola, S. (2018). Multiple creative talents and their determinants at the local level. Journal of Cultural Economics, 42, 243–269.CrossRefGoogle Scholar
  11. Csikszentmihalyi, M. (1996). Flow and the psychology of discovery and invention. New York: Harper Collins.Google Scholar
  12. Frey, B. (2002). Creativity, government and the arts. De Economist, 150, 363–376.CrossRefGoogle Scholar
  13. Frey, B. S. (2013). Arts & economics: Analysis & cultural policy. Berlin: Springer.Google Scholar
  14. Galenson, D. W. (2009). Old masters and young geniuses: The two life cycles of human creativity. Journal of Applied Economics, 12(1), 1–9.CrossRefGoogle Scholar
  15. Garagic, D., & Cruz, J. (2003). An approach to fuzzy noncooperative nash games. Journal of Optimization Theory and Applications, 118(3), 475–491.CrossRefGoogle Scholar
  16. Ginsburgh, V., & Weyers, S. (2006). Creativity and life cycles of artists. Journal of Cultural Economics, 30(2), 91–107.CrossRefGoogle Scholar
  17. King, N., & Anderson, N. (1995). Innovation and change in organisations. Andover: Cengage Learning EMEA.Google Scholar
  18. Kubler, D. (1997). Auctioning off labor contracts: Legal restrictions reconsidered. International Review of Law and Economics, 17(1), 63–74.CrossRefGoogle Scholar
  19. Laffont, J., & Tirole, J. (1993). A theory of incentives in procurement and regulation. Cambridge: The MIT Press.Google Scholar
  20. Menger, P. M. (2006). Artistic labor markets: Contingent work, excess supply and occupational risk management. In V. A. Ginsburgh & D. Throsby (Eds.), Handbook of the economics of art and culture (pp. 765–811). Amsterdam: North-Holland.CrossRefGoogle Scholar
  21. Oakley, K., Sperry, B., & Pratt, A. C. (2008). The art of innovation: How fine arts graduates contribute to innovation. London: NESTA.Google Scholar
  22. OECD/Eurostat. (2005). Oslo manual. guidelines for collecting and interpreting technological innovation data.Google Scholar
  23. Pratt, A. C. (2008). Innovation and creativity. In T. Hall, P. Hubbard, & J. R. Short (Eds.), The SAGE companion to the city. Thousand Oaks: SAGE.Google Scholar
  24. Prinz, A., Piening, J., & Ehrmann, T. (2015). The success of art galleries: A dynamic model with competition and information effects. Journal of Cultural Economics, 39(2), 153–176.CrossRefGoogle Scholar
  25. Simon, H. A. (1967). Understanding creativity. In J. C. Gowan, G. D. Demos, & T. E. Paul (Eds.), Creativity: Its educational implications. Hoboken: Wiley.Google Scholar
  26. Stoneman, P. (2010). Soft innovation: Economics, product aesthetics, and the creative industries. Oxford: Oxford University Press.CrossRefGoogle Scholar
  27. Throsby, D. (2001). Economics and culture. Cambridge: Cambridge University Press.Google Scholar
  28. Towse, R. (2006). Human capital and artists’ labour markets. In V. A. Ginsburgh & D. Throsby (Eds.), Handbook of the economics of art and culture (pp. 865–894). Amsterdam: North-Holland.CrossRefGoogle Scholar
  29. Towse, R. (2011). A handbook of cultural economics. Cheltenham: Edward Elgar Publishing.Google Scholar
  30. Weintraub, L. (2003). Making contemporary art: How modern artists think and work. High Holborn: Thames & Hudson.Google Scholar
  31. Wilson, N. C., & Stokes, D. (2005). Managing creativity and innovation: The challenge for cultural entrepreneurs. Journal of Small Business and Enterprise Development, 12(3), 366–378.CrossRefGoogle Scholar
  32. Zadeh, L. (1965). Fuzzy sets. Information and Control, 8(3), 338–353.CrossRefGoogle Scholar
  33. Zukin, S. (1982). Loft living: Culture and capital in urban change. New Brunswick: Rutgers University Press.Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Autorità Garante della Concorrenza e del Mercato (Italian Competition Authority)RomeItaly
  2. 2.Department of Economics and BusinessUniversity of CataniaCataniaItaly

Personalised recommendations