Auction sales make up 42% of the art market. Unlike the more clandestine private sales, which are usually done through a dealer, they generate a lot of publicity. “Smaller” sums, commonly in the millions, are reported in the holy trifecta of the art world: Artsy, Artnet, and the Art Newspaper. “Bigger” sums, usually in the tens or even hundreds of millions, make headings everywhere. So when you bid at an auction, especially if you bid big, will become public knowledge. But is that the reason bidders often exceed the initial amount they considered spending?
As much as publicity plays a role–and helps shape reputations, as we’ve mentioned previously–, the urge behind collectors’ incessant and illogical bidding lies elsewhere. Auction rooms are rife with competition, with collectors placing bids via bidding paddles, phones, and intermediaries. It is so intense it bores into your skin. The intensity of the bidding experience, along with the fast climbing of prices and obvious competitors, triggers two emotions: on one side, the desire to win the bid; and, on the other, the determination not to lose. Thus, action fever sets in.
Auction sales are preceded by an estimate–the rough value of what the auction house thinks it can get for a given item–and begin with a starting bid. Once the actual bidding starts and buyers notice the competition, adrenaline is released. They become extra attached to the artwork. “It’s theirs,” they think. They have to have it. But at this point, it is not just about buying; it’s about winning. Or, at the very least, not losing.
The allure of victory and its even stronger counterpart, the fear of loss, lead bidders to deviate from their original bidding strategies and spend more. Many end up buying artworks they don’t even like, all because they could simply not let go.
That says a thing or two about the actuality of the art business. While auctions should hypothetically be a good mechanism to determine people’s willingness to pay, anyone who’s attended one will say it all depends on who’s in the room that day. The achieved price is hardly ever “fair,” not to the buyer, and certainly not to the contemporary artist, whose long-term market is set to take a downturn when demand fails to sustain these emotion-driven peak prices. At this point, auction fever has turned the art market into a high-stakes battleground where impulse and irrationality overshadow intention and reason, and prices reflect the thrill of the chase more than the true value of art itself.
Irrationally yours,
Dan Ariely
(P.S. This is especially true for Evening Sales, which offer bidders a once-in-a-lifetime chance to purchase an original artwork — be it a painting by Botticelli or Filipino Lippi, or a canvas by Tamara de Lempicka. It is not exactly the same for lower-end auctions, specifically those selling prints and multiples, as clients are more likely to understand they will have another opportunity to purchase a print from the same edition for a lower price.)
