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DEA meets Picasso: The impact of auction houses on the hammer price

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Abstract

Employing a hedonic price approach within a framework of central tendencies no conclusive results about the impact of auction houses on final prices of art objects have been found. In order to focus on auction houses as a unit we have applied a benchmarking technique, DEA, developed for efficiency studies. New performance indicators are developed and calculated giving an insight into auction house differences impossible to obtain using hedonic price approach. The performance indicators may also be regarded as quality indicators assuming perfect arbitrage leads to the same unobservable quality of art object obtaining the same price.

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Article Open access 05 November 2018

Clifford S. Asness, Andrea Frazzini & Lasse Heje Pedersen

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Authors and Affiliations

  1. Department of Economics, University of Oslo, Oslo, Norway

    Finn R. Førsund

  2. Department of Public Policy and Public Choice, University of Eastern Piedmont, Novara, Italy

    Roberto Zanola

Authors
  1. Finn R. Førsund
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  2. Roberto Zanola
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Corresponding author

Correspondence to Finn R. Førsund.

Additional information

A first version of the paper was written while the first author was a visiting fellow at International Centre for Economic Research (ICER), Turin, January–March 2001. It is part of the project “Cheaper and better?” at the Frisch Centre, financed by the Norwegian Research Council, and of the project on “Cultural goods” financed by the Italian Research Council. We are indebted to Dag Fjeld Edvardsen for help with using the DEA software package of the Frisch Centre.

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Førsund, F.R., Zanola, R. DEA meets Picasso: The impact of auction houses on the hammer price. Ann Oper Res 145, 149–165 (2006). https://doi.org/10.1007/s10479-006-0031-x

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