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Are Art Auction Estimates Biased?

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  • Robert B. Ekelund
  • John D. Jackson
  • Robert D. Tollison

Abstract

This article considers whether presale auction estimates are unbiased predictors of price when “no‐sales” are considered utilizing a newly constructed sample of over 500 works by eight early twentieth‐century American artists. Unbiased presale auction estimates in predicting price, while expected, are generally not supported in previous work, but these studies (excepting one) do not include no‐sales in the calculations. In order to study the question, we employ a standard approach that uses an inverse Mills ratio arising from a sample selection probit to correct for selection bias. We find that controlling for selection bias, presale auction estimates appear to be biased downward, and we offer possible reasons for this result.

Suggested Citation

  • Robert B. Ekelund & John D. Jackson & Robert D. Tollison, 2013. "Are Art Auction Estimates Biased?," Southern Economic Journal, John Wiley & Sons, vol. 80(2), pages 454-465, October.
    • Handle: RePEc:wly:soecon:v:80:y:2013:i:2:p:454-465
    DOI: 10.4284/0038-4038-2012.087
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    References listed on IDEAS

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    1. Melissa Boyle & Justin Svec, 2022. "The Roundness of Antiquity Valuations from Auction Houses and Sales," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 48(4), pages 602-630, October.
    2. Stephen Sheppard, 2021. "Image Content, Complexity, and the Market Value of Art," Department of Economics Working Papers 2021-08, Department of Economics, Williams College.
    3. Shailendra Gurjar & Usha Ananthakumar, 2023. "Presale Estimates and Auction Prices in Indian Art Market: Accuracy, Determinants and Motivations," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 21(3), pages 555-567, September.

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