Reputation, Price, and Death: An Empirical Analysis of Art Price Formation

31 Pages Posted: 5 Mar 2008

See all articles by Heinrich W. Ursprung

Heinrich W. Ursprung

University of Konstanz; CESifo (Center for Economic Studies and Ifo Institute)

Christian Wiermann

affiliation not provided to SSRN

Date Written: March 1, 2008

Abstract

We analyze how an artist's death influences the market prices of her works of art. Death has two opposing effects on art prices. By irrevocably restricting the artist's oeuvre, prices, ceteris paribus, increase when the artist dies. On the other hand, an untimely death may well frustrate the collectors' hopes of owning artwork that will, as the artist's career progresses, become generally known and appreciated. By frustrating expected future name recognition, death impacts negatively on art prices. In conjunction, these two channels of influence give rise to a hump-shaped relationship between age at death and death-induced price changes. Using transactions from fine art auctions, we show that the empirically identified death effects indeed conform to our theoretical predictions. We derive our results from hedonic art price regressions, making use of a data set which exceeds the sample size of traditional studies in cultural economics by an order of magnitude.

Keywords: art price formation, death effect, durable goods monopoly

JEL Classification: Z11, J24, G12

Suggested Citation

Ursprung, Heinrich and Wiermann, Christian, Reputation, Price, and Death: An Empirical Analysis of Art Price Formation (March 1, 2008). CESifo Working Paper Series No. 2237. Available at SSRN: https://ssrn.com/abstract=1102963

Heinrich Ursprung (Contact Author)

University of Konstanz ( email )

Konstanz, D-78457
Germany
+49 7531 88 3713 (Phone)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Christian Wiermann

affiliation not provided to SSRN

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