The Pricing of Digital Art
Center for Financial Studies Working Paper No. 716, 2023
32 Pages Posted: 20 Mar 2024
There are 2 versions of this paper
The Pricing of Digital Art
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: Suggested Citation