Online art sales research

With the growth of the online art sales and online auctions market, an increasing body of associated academic research is available. A selection of freely available research articles is below. Some findings appear obvious – that reputation is important in online art sales, or that auction prices act as signposts for general art market prices. Others are less so – that repeat auction participants in online auctions lower their average bids over time, or that bidders in offline auctions effectively act as a social network. The value of preserving online auction catalogues is also investigated.

In addition to the articles below, the Duke Arts Law and Markets Initiative (DALMI) also makes a number of papers from 2009-2014 available on its website.

The Value of a Good Reputation Online: An Application to Art Auctions [2008]

Using a unique dataset of art auctions on eBay, we conduct an empirical analysis of the value of a seller’s online reputation. Several aspects distinguish our work from most existing research. We analyze a heterogeneous panel data consisting of a large number of observations over a large period of time, including significant variation in reputation across and within sellers. The panel structure of our dataset allows us to employ fixed effects techniques to control for observed and unobserved differences across auctions. The existing literature suggests a marginally significant, and small in magnitude, impact of reputation on sale price. In contrast, our results point to a highly significant, and sizable, impact of reputation on the behavior of buyers and sellers and on market outcomes. The data suggest that sellers on eBay exert significant effort to avoid a negative feedback. Our analysis reveals a significant impact of the eBay feedback rating large enough to be consistent with this observation.

Transparency in an Opaque Market Auction Prices as Anchors and Guideposts [2010]

What effects will increasing market data have, if that information is inherently incomplete? The high end fine art market provides an excellent case study for this question. Art price services have greatly facilitated access to auction price data, and have been heralded as increasing transparency and accountability in the art market. Based on inductive ethnographic research in London, I found strong demand for such numbers, particularly from the financial investment community, but at the same time, this transparency was only a partial development. Although auction sales were estimated to comprise 40% of the market, a full 60% were private, in the form of gallery sales and other undisclosed, difficult-to-verify exchanges. Increased data helped to increase trust by outside buyers, but the opacity of the market was also an opportunity for some actors to profit.

Furthermore, due to the complex relationship between gallery and auction prices, instead of transparency, I found reactivity, as galleries were pressured to set prices to conform with realized auction prices. This contradicts with the common assumption of auction price data as simply a market indicator; instead I present a theory about auction prices as agentic, acting as anchors and guideposts.

Myopic Bidders in Internet Auctions [2011]

We study the role of experience in internet art auctions by analyzing repeated bidding by the same bidder in a unique longitudinal field dataset. Our results show that experience significantly lowers the level of bids suggesting that bidders learn to avoid myopic behavior. Participating in more than ten auctions bring down average bids by between 10% and 20%. Our results imply that bidders learn to value the option of participating in future auctions over time. This has strong implications for auction platform operators who can benefit by understanding the inflow of new bidders. Our results are robust to bidder fixed effects.

Social Networks among Auction Bidders: The Role of Network Interactions and Key Bidders on Auction Prices [2014]

Auctions have been studied extensively as an economic marketplace. The economist’s focus is on modeling final sales prices, but the processes that give rise to those outcomes are rarely studied in great detail. This research is intended to provide that complementary perspective. We show how the interactions between bidders in an auction unfold in a dynamic pattern of bids and counter-bids, and thereby over the duration of an auction, create a network structure. The auction network contributes significantly to models of price dynamics and the network predicts final sales prices better than economic (non-network) indicators alone. In addition, network analyses are useful in identifying the key bidders whose actions seem to exert disproportionate influence on other bidders and the final sales prices. Furthermore, the key bidders may be identified very early in an auction process, which has practical implications for the auction house managers and for other bidders.

Preserving Web-based Auction Catalogs at the Frick Art Reference Library [2014]

The Frick Art Reference Library (FARL) has a collection of over 90,000 auction catalogs and they are one of the most requested resources at the library, as more auction houses are publishing on-line. FARL began the “Reframing Collections for a Digital Age” project to address the stability of born-digital art research materials. The first phase of the project identified the basic risks and determined that Archive-It software was the best means of capturing this information. The second phase, described in this paper, identified criteria to determine preservation priorities and evaluate what has already been captured by the Internet Archive, with the goal of creating a list of websites that can and should be harvested immediately. The study also examined the pilot seed crawl results which monitor quality of materials being collected.