Quantifying Beauty : The Implications of Digitalization for the Auction House Industry

Sammanfattning: This degree project investigates the impact of digitalization on the auction house industry. The first part of the paper consists of a hedonic regression analysis aiming to deduce the key determinants of art prices and investigate if pricing of art could be improved using mathematics and technology. The second part examines how the auction house market and the auction house business is affected by the technological revolution. The results of the regression analysis indicate that the the key determinants of art prices are estimated price, artist recognition, if the work is dated, auction house sold at, time period painted, subject matter and size. It is additionally implied that the auction houses do not currently set correct prices, suggesting pricing could be improved by the use of e.g. a mathematical model.  In the second part, the result is based on literature and interviews with experts in the field of arts. It is indicated that the auction houses are affected by digitalization through more informed and diverse customers, a higher efficiency and hence lower costs. Furthermore, an increasing part of sales originate from online auctions. It is nevertheless likely that traditional hammer auctions will still play a role in the future.