Kunst und Preise

How are prices established in the market for contemporary art? Buyers in this market are confronted with fundamental uncertainty since “quality” is only difficult to determine and the development of prices is non-predictable. Since the emergence of a market for contemporary art presupposes at least the possibility for intentional rational decision-making, this uncertainty must be reduced. We argue that the value of a piece of art or an artist is established in an intersubjective process of granting reputation by experts and institutions in the field of art. This is achieved primarily through the institutions of the art market and the training of artists, i.e. through galleries, curators, critics, art dealers, journalists, collectors, and art schools. They participate jointly in the making of artistic reputation of the artist’s work that provides, in turn, the basis for the determination of its economic value. For testing this hypothesis we assembled and analyzed two datasets with data on the biographies of artists and prices for their works.