The Pricing of Digital Art

Center for Financial Studies Working Paper No. 716, 2023

32 Pages Posted: 20 Mar 2024

See all articles by Cathy Yi‐Hsuan Chen

Cathy Yi‐Hsuan Chen

University of Glasgow, Adam Smith Business School; Humboldt Universität zu Berlin

Roman Kräussl

Bayes Business School (formerly Cass); Hoover Institution, Stanford University

Patrick Verwijmeren

Erasmus University Rotterdam (EUR)

Multiple version iconThere are 2 versions of this paper

Date Written: December 21, 2023

Abstract

The intersection of recent advancements in generative artificial intelligence and blockchain technology has propelled digital art into the spotlight. Digital art pricing recognizes that owners derive utility beyond the artwork’s inherent value. We incorporate the consumption utility associated with digital art and model the stochastic discount factor and risk premiums. Furthermore, we conduct a calibration analysis to analyze the effects of shifts in the real and digital economy. Higher returns are required in a digital market upswing due to increased exposure to systematic risk and digital art prices are especially responsive to fluctuations in business cycles within digital markets.

Keywords: Digital art, conspicuous consumption, utility dividends, risk premium, valuation

JEL Classification: D8

Suggested Citation

Chen, Cathy Yi‐Hsuan and Kraeussl, Roman and Verwijmeren, Patrick, The Pricing of Digital Art (December 21, 2023). Center for Financial Studies Working Paper No. 716, 2023, Available at SSRN: https://ssrn.com/abstract=4694237 or http://dx.doi.org/10.2139/ssrn.4694237

Cathy Yi‐Hsuan Chen

University of Glasgow, Adam Smith Business School ( email )

University Avenue
Glasgow, G12 8QQ
United Kingdom
01413305065 (Phone)

HOME PAGE: http://https://gla.cathychen.info

Humboldt Universität zu Berlin ( email )

Unter den Linden 6,
Berlin, 10117
Germany
03020935631 (Phone)
10099 (Fax)

Roman Kraeussl (Contact Author)

Bayes Business School (formerly Cass) ( email )

Hoover Institution, Stanford University ( email )

Stanford, CA 94305
United States

Patrick Verwijmeren

Erasmus University Rotterdam (EUR) ( email )

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

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