(Honors Thesis under the direction of Dr. Gregory Brown)

Abstract: The art market operates under substantial price uncertainty and information asymmetry. This thesis examines how pre-auction estimates shape bidder behavior and hammer price outcomes, and whether observable characteristics explain variation in estimate uncertainty, sale success, and hammer price realization. Using over 100,000 auction lots of fine art from major auction houses, I utilize regression analysis to evaluate the informational relevance of pre-auction estimates. I find strong evidence of anchoring: as estimate uncertainty increases, hammer prices converge within the estimate range and shift toward the low estimate. Higher uncertainty substantially reduces hammer price placement in relation to the estimate range. Other observable characteristics exhibit varying explanatory power for estimate uncertainty, successful sale propensity, and hammer price outcomes. Correcting for potential sample selection bias strengthens the anchoring effect and weakens prior sale informational effects. Overall, the findings highlight the key role of auction house estimates in bidder price anchoring.