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Anchoring effects in the Chinese art market

Author

Listed:
  • Bian, Timothy Yang
  • Huang, Jun
  • Zhe, Siqi
  • Zhang, Man

Abstract

Using a large auction dataset for traditional Chinese paintings, we test for anchoring effects in the art market. We find that bidders and auctioneers both anchor on past auction prices (which is an externally-provided anchor) and anchoring effects become stronger if time intervals between two auctions of the same paintings are relatively short. When a painting is reauctioned by the same auction house, auctioneers are influenced by both past auction prices (an externally-provided anchor) and auctioneers’ previous estimates (a self-generated anchor). If time intervals between two auctions are relatively short, the influence of the externally-provided anchor prevails over that of the self-generated anchor.

Suggested Citation

  • Bian, Timothy Yang & Huang, Jun & Zhe, Siqi & Zhang, Man, 2021. "Anchoring effects in the Chinese art market," Finance Research Letters, Elsevier, vol. 43(C).
    • Handle: RePEc:eee:finlet:v:43:y:2021:i:c:s1544612321001318
    DOI: 10.1016/j.frl.2021.102050
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    References listed on IDEAS

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    1. Cen, Ling & Hilary, Gilles & Wei, K. C. John, 2013. "The Role of Anchoring Bias in the Equity Market: Evidence from Analysts’ Earnings Forecasts and Stock Returns," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 48(1), pages 47-76, February.
    2. Luc Renneboog & Christophe Spaenjers, 2013. "Buying Beauty: On Prices and Returns in the Art Market," Management Science, INFORMS, vol. 59(1), pages 36-53, February.
    3. Alan Beggs & Kathryn Graddy, 2009. "Anchoring Effects: Evidence from Art Auctions," American Economic Review, American Economic Association, vol. 99(3), pages 1027-1039, June.
    4. Yang Shi & Paul Conroy & Mancang Wang & Chenlu Dang, 2018. "The Investment Performance of Art in Mainland China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(6), pages 1358-1374, May.
    5. Leung, Tin Cheuk & Tsang, Kwok Ping, 2013. "Anchoring and loss aversion in the housing market: Implications on price dynamics," China Economic Review, Elsevier, vol. 24(C), pages 42-54.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Kim Oosterlinck & Anne-Sophie Radermecker & Yuqing Song, 2023. "The Valuation of Copies for Chinese Artworks," Working Papers CEB 23-008, ULB -- Universite Libre de Bruxelles.

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    More about this item

    Keywords

    Art market; Anchoring effects; Externally-provided anchor; Self-generated anchor;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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