Dramatic Auction on Leonardo Da Vinci’s ‘Salvator Mundi’
https://www.dailymail.co.uk/news/article-5554969/Two-Arab-princes-cost-450MILLION-bidding-war-Da-Vincis-Salvator-Mundi.html
When the news first came out, it made a huge stir among collectors. Leonardo Da Vinci’s ‘Salvator Mundi’ was sold at an auction last November for a eye-watering $450,312,500, which broke the previous record $179,364,992 for the most expensive painting dealt at auction for Picasso’s “Les Femmes d’Alger” by more than $270 millions, a number that could buy one and half of “Les Femmes d’Alger”. “Salvator Mundi” was called the “The Last da Vinci.” The painting spent centuries in obscurity until it was rediscovered in 2005 and underwent a six-year restoration and verification process. The small piece depicts Jesus raising his right hand in blessing and holding a crystal orb, meant to represent the world, in his left. Certainly, this piece was not worth this value. It was actually offered to the Qataris for just $80 millions, and the Qataris did not match the price. According to the reliable source, “that’s more in the ballpark of what it’s really worth.”
It turned out that the two final bidders competed for this piece were mostly due to political reasons. The fail of applying the knowledge of what we learned in auctions and game theory was the key point leading to the result. According to the article, the painting’s buyer was Saudi Prince Bader bin Abdullah, who was on behalf of the country’s crown prince Mohammed Bin Salman and the other final bidder was De-facto United Arab Emirates ruler Mohammed Bin Zayed. However, neither of them knew that the other was bidding, instead they both feared to lose the auction to the representative from the Qatari ruling family, who did not actually participate in the auction, as Qatar is a fierce Gulf rival of Saudi Arabia and the UAE and its ruling family is well-known for its interest in high-end art. Thus, they persistently raised the price and eventually UAE quitted when the price reached $400 millions and the auction lasted only a little less than 20 minutes.
The auction was an ascending bid which meant that the price would keep being raised until no one else would match the price and this bidder won the auction. This type of auction was what made this miracle happen because neither of them wanted to lose to their imaginary enemy. Like prisoners in Prisoners’ Dilemma that both players have two strategies, commit or not commit, in this game, both of them had choices to leave the game or to raise the price. Since they all thought the other would quit first, each side unceasingly raised the price to compel the other. The dominant strategy for ascending bid is to stay until their values are reached. However, both sides did not set their limits beforehand, which explains the reason why even though they did not value this piece this much artistically, they were still calling a higher price irrationally. In fact, this drawing was too Christian for Saudi Arabia’s collection and they did not even desperately want it. The crown prince struck a deal with his Emirati counterpart to swap the painting for a superyacht after the auction. Worse, according to the article, after getting this drawing, Salman’s $450 million purchase was condemned by critics of his regime because it came during a time when the Saudi government had implemented austerity measures due to the country’s ailing economy, and the crown prince was conducting a corruption crackdown, arresting family members over their alleged profligate self-enrichment. If they knew about tricks in the field of auction and game theory, they could possibly prevent such a huge loss and even the influence on their political status. As Mohammed Bin Zayed told Salman: “that was us bidding for it, why didn’t you tell me?” The Emirati palace source revealed a further twist that heightened the costly bungle.