Kathryn Graddy

Does creativity, on average, increase or decrease during bereavement? Dates of death of relatives and close friends of 33 French artists and 15 American artists were gathered from electronic sources and biographies, and information on over 15,000 paintings was collected from Blouin’s Art Sales Index and the Metropolitan Museum of Art’s online collection, including over 12,000 observations on price. To preview the results, an event study indicates that prices of paintings decrease by over one-third on average in the two years following the death of a friend or relative. Furthermore, paintings that were created during this bereavement period are less likely to be included in the Met’s collection.

Works of art and culture are sold by many means. These include transactions between dealers and their customers, auctions with open outcry, internet auctions, and even, occasionally, sealed bid auctions. However, the standard procedure for establishing art valuations for the most expensive works is still most commonly the English auction, where prices ascend in open bidding. This paper describes how art auctions really work, along with the state of competition between auction houses. For expensive art, competition is dominated by the duopoly of Christie's and Sotheby's. The paper proceeds to describe various interesting features of art auctions, including the declining price anomaly, whether or not auctioneers provide accurate information, and anchoring effects in art auctions. The public auction system provides a valuable method for setting and determining values; it is probable that the inability of auctioneers to capture a significant part of the benefits of the information they produce leads to less use of the auction system than is optimal for society.
Includes bibliographical references (unnumbered pages 16-17).