What determines a successful auction? An analysis.
What determines a successful auction? An analysis.
Have you ever wondered why auctions work the way they do? Well, Ive found a paper that may hold the answer to that question. You can read it here: http://www.rst.nus.edu.sg/research/workingpaper/2004-010.pdf.
The paper itself deals with the various aspects of how auctions function and which underlying factors determine a successful auction sale. The research is done using data from auctions in Singapore and several other sources.
Using empirical data and several statistical data analysis techniques the researchers come to many interesting results and conclusions. First of all an auction sale is more likely to occur if its about a distress sale. This is logical because the seller wants to get a part of his/her investment back, no matter the cost. The fact that the chance of a sale is higher if the market is not in a recession, the choice of the auction house/agent and whether there are a lot of people present at the auction are other determining factors. There are still other factors which are also mentioned in the paper. The thing that all these factors have in common is the fact that they all appear to me as common sense and seem logical, the paper only proves it to be so.
This study may prove valuable to people who want to sell things at, or organize an auction. Meaning they can first study the different factors that lead to a successful sale. This in order to find out if the time is ripe to sell or not, which is of course the whole reason of an auction: selling things.
Reference: Ong, E. S. ; Lusht, K. & Mak, Y. C. 2005. Factors Influencing Auction Outcomes: Bidder Turnout, Auction Houses and Market Conditions. Journal of Real Estate Research. Volume 27, number 2, 177-192.
DEA meets Picasso: The impact of auction houses on the hammer price
DEA meets Picasso: The impact of auction houses on the hammer price
In May 2004 Picassos famous work Garcon a la Pipe was sold at Sothebys New York for $104 million, and became the most expensive painting ever. This paper examines: is there a connection between the price of an artwork and the auction house? and what is DEA?.
The amount of people, who invests in expensive paintings, is increasing. So it becomes more important to know which indicators define the hammer price of an expensive painting. When we focus on auction houses as a main variable, we notice it is difficult to link the inputs (the physical characteristics of Picasso paintings) and the outputs (the auction prices). A benchmarking technique called DEA, is used to investigate if there is a connexion between them.
So our two questions are related. The Data Envelopment Analysis (DEA) is a tool which allows us to analyze various input indicators of Picasso paintings sold in different auction houses. The result of this analysis shows that there is a difference in performance between the auction houses. So it is a fact that some auction houses are able to sell a painting at a higher price than others. Sothebys New York seems to be the most efficient house over all Picasso periods and sales periods according to the DEA.
Fakes, do measures need to be taken or should we promote it?
Fakes, do measures need to be taken or should we promote it?
I have found a paper about fake art and whether it should be tackled or should be welcomed as something acceptable and not bad. The paper gives an economic view on fakes instead of dealing with the art historic view of fakes being something bad. The paper defends its own opinion, comparing the negative and the positive aspects of fake art.
Maybe fakes are wanted in the art industry? Fakes can be a blessing for artists because they can boost up the notoriety of the artist. Its free promotion! It shows that this creation is in demand, the willingness-to-pay raises. Fakes can give a boost to the artist his creativity, enhancing his skills. A lot of old masters use the technique of copying to improve their talent.
Not everything about fakes, as may be suspected, is positive. Fakes creates uncertainty for future buyers. This leads to the fact that some auction houses and branded art dealers promote the authenticity of the works they are selling. Fakes can lead to a market of organized crime.
The paper really changed my point of view towards (illegal) fakes. We should be more positive if we find an extremely good copy of a work, instead of being disappointed for what reason? we should be grateful that such good painters still exist.
Reference: Frey, B.S., 2000. Art fakes what fakes? Working Paper Series of the University of Zurich, No. 14, 1-18.
