Biased Auctioneers

HEC Paris Research Paper No. FIN-2019-1332

47 Pages Posted: 20 Mar 2019 Last revised: 1 Jul 2021

See all articles by Mathieu Aubry

Mathieu Aubry

Ecole Nationale des Ponts et Chaussées (ENPC)

Roman Kräussl

Universite du Luxembourg - Department of Finance; Hoover Institution, Stanford University

Gustavo Manso

University of California, Berkeley - Haas School of Business

Christophe Spaenjers

HEC Paris - Finance Department

Date Written: June 30, 2021

Abstract

We construct a neural network algorithm that generates price predictions for art at auction, relying on both visual and non-visual object characteristics. We find that higher automated valuations relative to auction house pre-sale estimates are associated with substantially higher price-to-estimate ratios and lower buy-in rates, pointing to estimates’ informational inefficiency. The relative contribution of machine learning is higher for artists with less dispersed and lower average prices. Furthermore, we show that auctioneers’ prediction errors are persistent both at the artist and at the auction house level, and hence directly predictable themselves using information on past errors.

Keywords: art, auctions, experts, asset valuation, biases, machine learning, computer vision

JEL Classification: C50, D44, G12, Z11

Suggested Citation

Aubry, Mathieu and Kraeussl, Roman and Manso, Gustavo and Spaenjers, Christophe, Biased Auctioneers (June 30, 2021). HEC Paris Research Paper No. FIN-2019-1332, Available at SSRN: https://ssrn.com/abstract=3347175 or http://dx.doi.org/10.2139/ssrn.3347175

Mathieu Aubry

Ecole Nationale des Ponts et Chaussées (ENPC) ( email )

28, rue des Saints-Peres
75343 Paris Cedex 07
France

HOME PAGE: http://imagine.enpc.fr/~aubrym/

Roman Kraeussl

Universite du Luxembourg - Department of Finance ( email )

L-1511 Luxembourg
Luxembourg

Hoover Institution, Stanford University ( email )

Stanford, CA 94305
United States

Gustavo Manso

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

Christophe Spaenjers (Contact Author)

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

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