A Few Notes on Auctions: The Boom in the Asymmetric Art Auction Market

The art market, following the example of financial markets, is divided into a primary market, where works are traded directly from artists, and a secondary market that is mainly the auction market. COVID-19 and galloping inflation have influenced the creation of a bull market in artwork. The high incomes of some buyers and inflation have influenced the emergence of the so-called “glittery” art market. Works by neglected artists have “very much taken on a life of their own”: fantasy art, works by young poster artists, casting “nightmares”—have been selling well for more than a year. People terrified of inflation are putting their money “in works of art”. The auction market dominates the primary market because anonymity makes it easier to enter the art market. The gallery market does not guarantee this anonymity. Very often, the auction market for works of art is used for money laundering. The purpose of this paper is to show that auction mechanisms are a good tool for the efficient allocation of goods and money in an era of galloping inflation, including non-standard objects such as works of art. These mechanisms, due to the information asymmetry, often lead to the generation of all kinds of pathologies and the increasing incidence of the phenomenon known as the winner’s curse.