Abstract
This research takes an in-depth approach, to analysing the relationship between the price for 'Fine Art' that is acquired in the secondary art market and the return to an investor who invests in 'Fine Art' in the primary art market. The approach taken is to understand the concepts of ‘meaning’ and how this ‘meaning’ is interpreted from symbolic images. An analysis of the market for art and ‘shared value’ are explored pointing out that the market for 'Fine Art' is highly inefficient and besieged by pricing rigidities induced through informational constraints. Information is a key feature in determining the ‘real’ value for art, and the role of information in determining value and ultimately a price is explored within the pages of this text.
The 'Value of Information' is used to map the relationship that exists between the secondary art market and the primary art market, particularly the forward and backward transmission mechanisms between the two independent, yet interrelated markets.
Problems associated with a price index for art is examined, and the internationally accredited Artprice index is used to test the interrelationship between the art market and other key international indicators to better understand the construct of the investor who chooses to invest in art.
The research demonstrates that an investor who chooses to invest into 'Fine Art' is very different from one who chooses to invest in the stock market. While an investor may choose to invest in either or both of the markets, the decision-making process involved in investing in 'Fine Art' is different from the decision-making process of investing into the stock market. The findings of this research suggest that an in-depth assessment of the decision-making process of the investor should be built into the pricing index for 'Fine Art' so as to better capture the fundamentals of the art market and thus improve on the efficiency of an art price index.
M.Com.