Declining Values and the Afternoon Effect: Evidence from Art Auctions

RAND JOURNAL OF ECONOMICS, Vol 28 No 3

Posted: 24 Sep 1997

See all articles by Alan Beggs

Alan Beggs

University of Oxford

Kathryn Graddy

Brandeis University - Department of Economics

Abstract

We study the order of sale in art auctions. The final bid relative to the auctioneer's estimated price declines throughout the course of an auction. A theoretical model shows that in an auction ordered by declining valuation, even in the presence of risk-neutral strategic bidders, the price received relative to the estimate for later items in an auction should be less than the price relative to the estimate for earlier items. Furthermore, ordering heterogeneous items by value maximizes revenue for the auctioneer.

JEL Classification: D44

Suggested Citation

Beggs, Alan and Graddy, Kathryn, Declining Values and the Afternoon Effect: Evidence from Art Auctions. RAND JOURNAL OF ECONOMICS, Vol 28 No 3, Available at SSRN: https://ssrn.com/abstract=10795

Alan Beggs

University of Oxford ( email )

Oxford
United Kingdom
+44 1865 277 932 (Phone)
+44 1865 277 937 (Fax)

Kathryn Graddy (Contact Author)

Brandeis University - Department of Economics ( email )

415 South Street MS 021
Waltham, MA 02453-2728
United States
781-736-8616 (Phone)
781-736-2269 (Fax)

HOME PAGE: http://people.brandeis.edu/~kgraddy/

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