Abstract
Art uses labour and capital. These resources are scarce. As a result, opportunity costs arise. Cultural consumers have to make a choice between various supplies of art. In a well-functioning market, supply and demand balance. Art markets, in particular auctions, are characterized by large risks that rarely exist in other markets. These relate to authenticity, attribution, quality, and theft. Some unexpected market changes may also occur. Behavioural anomalies such as ownership bias and home bias are prominent. Investment in art diversifies a portfolio. The most sensible strategy is to buy for love of art.
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Related Literature
This chapter is partly based on
Frey BS, Cueni R (2014) Special risks in the art market. Unpublished ms, University of Zurich
A pathbreaking contribution is
Baumol WJ (1986) Unnatural value: or art investment as floating crap game. American economic review (Papers and Proceedings of the American Economic Association), 76(2):10–14
Various contributions on art markets and auctions are included in the textbooks and handbooks listed in the first chapter.
Recent empirical analyses include
Dimson E, Spaenjers C (2014) The investment performance of art and other collectibles. In: Dempster A (ed) Risk and uncertainty in the art world. Bloomsbury, London, pp 219–238
Frey BS, Eichenberger R (1995) On the rate of return in the art market: survey and evaluation. Euro Econ Rev 39(3–4):528–537
Klamer A (2014) Without uncertainty, there is no art market. In: Dempster A (ed) Risk and uncertainty in the art world. Bloomsbury, London, pp 275–286
Renneboog L, Spaenjers C (2013) Buying beauty: on prices and returns in the art market. Manage Sci 59(1):36–53
Spaenjers C (2010) Returns and fundamentals in international art markets. Job market paper
The death effect is studied in
Ursprung HW, Wiemann C (2011) Reputation, price and death: an empirical analysis of art price formation. Econ Inq 49(3):697–715
Behavioural anomalies are discussed in
Frey BS (2001) Inspiring economics. Human motivation in political economy. Edward Elgar, Cheltenham UK and Northampton, MA. USA
Frey BS, Eichenberger R (1994) Economic incentives transform psychological anomalies. J Econ Behav Organ 23(2):215–234
Goodwin J (2008) The international art markets: the essential guide for collectors and investors. Kogan Page, London
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Frey, B.S. (2019). Art Markets and Auctions. In: Economics of Art and Culture. SpringerBriefs in Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-15748-7_3
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DOI: https://doi.org/10.1007/978-3-030-15748-7_3
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