Weekend quiz – behavioural economics at the art gallery

On a visit to an art gallery yesterday I was told why paintings of the same size are typically priced the same, even when the artist and the gallery think one is better than the other.  Any guesses as to why she said this was?  It made perfect sense in terms of ‘behavioural economics’.

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James Farrell
James Farrell
14 years ago

I’ll kick off, with two ideas:

1. Many buyers primarily want the picture as an investment. They are more likely to invest if they think the value is a fairly predictable and well understood function of two variables – artist and size – rather than being at the mercy of highly variable subjective preference. In short, paintings are like bank notes — you’ll hold them in the confidence that the next person will accept them when you’re ready to offload them. It’s in the interest of the dealers to promote this feeling of confidence.

2. A simple marketing trick. Put the same price on both paintings, and the buyer will grab the better one, congratulating himself on his shrewd judgment. Once he’s out the door, you discount the other one.

Robert
Robert
14 years ago

Dunno much about ‘behavioural economics’ but I know what other art buyers like. Or some such? By ye buyers’ deeds shall ye know them? How great thou art!

Good to see it once again being sold by the square metre. Walls, on the statistical main, are only so big; are pastels still in, or is it curtains for that?

Makes sense, and here’s to art sales being regulated – what a rip off it’s been. More strength to that gallery. That music would only follow suit, and sell cd’s all at the same price.

For what is one creative being, compared with another? Seriously? Who can judge?

Francis Xavier Holden
14 years ago

Most paintings are purchased simply as wall funiture and people do not have huge foyers to hang them. The size and colours of the frame are as important as the painting. People who buy one painting will most often be using it to replace another, therefore a wall object of the same size as that being replaced is important to fit in.

Jc
Jc
14 years ago

Here’s my pot shot at the answer:

The better painting ought to sell first. That acts as an inducement to sell the other “lesser quality” painting at the same price as supply in the exhibition is reduced.

Jc
Jc
14 years ago

Ha! Actually that’s a good point. The lesser price could actually be a turn off.

Armchair
Armchair
14 years ago

(And I dont think much discounting goes on in galleries).

You might be surprised at just whats possible once there is a relationship between the gallery owner and the buyer (at least in the case of lesser known artists).

As to the same size / same price issue For lower priced works the actual cost of framing would play a part (dry mounting large photographs, for example can cost over $1,000) irrespective as to if its a good photograph or not, apart from that I would guess that its also a recognition of the fact that there is no universally accepted measure of what makes one picture better than the next (given that both were done by the same artist at the same time).

Robert
Robert
14 years ago

Does it matter that the gallery’s reputation is significantly diminished by doing this? It’s poor form, Nicholas.

Jc
Jc
14 years ago

As an aside:

Anyone been following that art fraud case in Melbourne? An older couple was convicted of fraudulently passing aboriginal artworks through the auction houses as those of a famous native artist. They were convicted on fraud late last week.

What is absolutely amazing is the background story: just how little effort the houses spend in checking out the authenticity of the work.

One major museum in Switzerland bought one of these frauds. Let’s watch the blowback as this is going to be interesting.

Admittedly Sothebys did pick up the fraud and reported it to the cops. However the other houses were totally oblivious.

ChrisPer
ChrisPer
14 years ago

I can confirm that Armchair is right – the frame, paint and materials in paintings in student exhibitions puts a base on the asking price, and those who make pricing decisions use them as a starting point. Size drives price, and big works also can take more labour, though it isn’t a clean linear relationship.

Despite subjectivity, it IS perfectly possible to tell different quality works apart with a minimal familiarity. Only a newcomer bluffed by a sense of inferiority to ‘art people’ can overcome the natural ability to decide for ourselves.

The value of having gallery owners recognise you and know your name isn’t that great; I think you need to be regularly buying volumes of work to get serious reductions, and probably it would help if they were from the same artists because fo the consignment nature of the business.

Armchair
Armchair
14 years ago

Despite subjectivity, it IS perfectly possible to tell different quality works apart with a minimal familiarity. Only a newcomer bluffed by a sense of inferiority to art people can overcome the natural ability to decide for ourselves.

I look forward to winning a heap betting on the next Archibald winner then : )

pablo
pablo
14 years ago

I was once advised by a ‘reputable’ gallery mentioned in previous posts that the painting I offered by an established artist, needed an updated colour on the frame if it were to appeal (ie sell at the usual prices this artist commanded).