Pre-sale Estimates, Risk Analysis, and the Investment Quality of Fine Art
نویسندگان
چکیده
This paper examines the importance of the inclusion of buy-in data in analyzing the risk of investment in works of art. Using the data set of French Impressionist paintings brought to auction from 1985 to 2001, we construct a theoretical lognormal distribution to include the value of works that are bought in-house, and use this to examine bias in the pre-sale estimates of auction experts. It turns out that experts are accurate and unbiased if we consider both how potential buyers value works, and the valuations of the seller or their reserve price. We also show how this distribution can be used by financiers to assess the risk of art portfolios. (JEL G11, G14, G12, C160, Z10)
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