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Art Auction Etiquette and the Corrupt Art Market

The economy of fine art is a ravenous one, with famous pieces, fresh young artists, and fabulous wealth gobbled up by droves of auctioneers and sellers the world over. But no section of this economy is as scary and cutthroat as the in-house auction. These are the places where some of the most famous art pieces ever made have been sold for amounts of money greater than the GDP of some countries. It is the complete opposite of the Black Market; here, things are moved from consumer to consumer with as much publicity and pageantry as the biggest art dealers can muster. The result of this is that an otherwise intricate game of 3-dimensional chess appears at first glance to be a shouting match where the person with the most money also has the loudest voice. Indeed, the facade of the auction is as important to its identity as the game being played, but knowledge of how to play the game is held only by the very elite. For example, as shown by the two resources below, auctions generally list prices in advance, or at least a range of prices, so that buyer’s can tell what they can expect to pay at auction for said piece. But of course these ranges aren’t just there to notify you, they’re there to *influence* you, so that your true value for the art piece shifts to what they say it should. And what is the “true value” of an art piece anyway? You can believe that the piece is worth as much as you bid for it in auction, but if the seller doesn’t want to sell the piece because they believe it’s worth more, than the auction house has agreed not to sell it to you. There have even been incidences where large auction houses are caught artificially seeding the bidding audience with actors to drive the bidding price up far above its actual value.

To put this in terms of our textbooks, the way an actual art auction is run is never as simple as a second-price auction where you bid your true value and always come away at least feeling neutral about the affair. There is an intricate dance that the seller, the buyer, and the art dealer are all part and parcel in, and the dance isn’t as simple as always bidding above, at, or below your true value. The art market, with its prices based on Provenance and other extremely volatile factors, is an extreme case of the auction gone wrong and wildly unpredictable, but there are likely other examples where our game-theory based background in auctioneering just won’t make the cut. Something to think about the next time you enter a famous gallery…

 

Resource Used:

http://www.sothebys.com/en/Glossary.html

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