Anchoring or Loss Aversion? Empirical Evidence from Art Auctions
39 Pages Posted: 25 Sep 2014
Date Written: June 2014
We find evidence for the behavioral biases of anchoring and loss aversion. We find that anchoring is more important for items that are resold quickly, and we find that the effect of loss aversion increases with the time that a painting is held. The evidence in favor of anchoring and loss aversion with this large dataset validates previous results and adds to the empirical evidence a finding of increasing loss aversion with the length a painting is held. We do not find evidence that investors can take advantage of these behavioral biases.
Keywords: anchoring, art auctions, endowment effect, loss aversion
JEL Classification: D03, D44, Z11
Suggested Citation: Suggested Citation