Art Attack: The Rise of The Orient

Art Attack: The Rise of the Orient

Sotheby's success in Hong Kong sets a new record for business in Asia

In May 2013, renowned global auction house Sotheby successfully conducted a five day art auction in Hong Kong where it raised HK$ 4.2billion, a record for the auction house in the city. Chinese art dominated the various auction sessions which shows the rising appreciation for Chinese art. According to sources, more than 16 records were set during this 5-day event. A preliminary analysis of the Sotheby auction this fall throws up some interesting facts.

The anchoring effect…what's that?

We found that the most important factor determining the final bid price is the pre sale estimated price. The estimated price is decided by the auction house based on the analysis of the piece of art. Our analysis showed that there is a strong relationship between the estimated price and the final bid price. We see that for every 1 per cent increase in the estimated price of a piece we can on average expect a 78 per cent increase in the final bid price for the piece. Of the 450 lots on auction, only 64 were sold for lower than their estimated price. We can thus conclude that a high estimated price gives the bidders a signal that the work of art must be more valuable and this will be an anchor in their decision on their bid prices.

A dead artist is worth more than a living one…

We've known this all along (remember Van Gogh?). Our analysis showed that things were no different at the Sotheby's auction. A dead artist's paintings on average commanded an 85 per cent premium over the work of a living artist. However, what is surprising is that our analysis also shows that there was no relationship between the living status of the artists and the high estimates, something that we would have