In Art We Trust

CentER Discussion Paper Series No. 2021-016

72 Pages Posted: 25 Jun 2021 Last revised: 23 Jan 2023

See all articles by Yuexin Li

Yuexin Li

Renmin University of China

Marshall Xiaoyin Ma

Erasmus University Rotterdam (EUR)

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Date Written: June 21, 2021


While trust is the cornerstone of any market’s functioning, it is of particular importance in markets that are unregulated, illiquid, and opaque, such as the art market. This study examines the role of authenticity, as captured by provenance information in auction catalogs, on the probability of auctioned oil paintings, watercolors, and prints being sold, their price formation, and returns. Auction catalogs include four authenticity dimensions: pedigree (ownership “blockchain,” descendance information, type of past owners, such as renowned collectors, and past sales records); exhibition history (e.g., in famous museums or galleries); literature coverage (e.g. in catalogues raisonnés or authoritative press), and certification (e.g. artist’s physical testimonial, experts’ opinions). We find that trust, proxied by provenance information, increases the probability of a work being sold by up to 4%, leads to hammer price premiums up to 54%, and increases annualized returns by 5% to 16%. To address potential endogeneity problems between the provision of provenance, and past prices/price expectations, we perform quasi-natural experiments in difference-in-differences settings on auction houses’ provenance policy changes following authenticity litigation, and on a contamination effect of the discovery of fakes and forgeries on the oeuvre of forged artists. We also test transactions less affected by past prices, such as estate sales following the death of a collector. The findings on the relation between provenance and prices are robust to artist reputation, artistic style, auction house reputation, art market liquidity, and artist career timing.

Keywords: auction; hedonic pricing; art investment; art returns; auction house

JEL Classification: D44, G20, G11, Z11

Suggested Citation

Li, Yuexin and Ma, Xiaoyin and Renneboog, Luc, In Art We Trust (June 21, 2021). CentER Discussion Paper Series No. 2021-016, Available at SSRN: or

Yuexin Li (Contact Author)

Renmin University of China ( email )

Mingde Business Building
Beijing, Beijing 100872

Xiaoyin Ma

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA

Luc Renneboog

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE

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