Study on the Price Formation Mechanism of Art Auctions from the Perspective of Behavioral Economics: The Influence of Anchoring Effect and Endowment Effect

The art market is both unique and subjective. Particularly in art auctions, transaction prices not only reflect the value of the artwork but are also influenced by the psychological factors of the bidders. This paper systematically examines how the anchoring effect and endowment effect, as described in behavioral economics, contribute to high transaction prices in art auctions. The research focuses on traditional Chinese paintings, Impressionist works, and contemporary art, with data sourced from major art trading platforms such as Artron.net, Christies, and Sothebys. The results indicate that the anchoring effect significantly influences bidders offers through prior auction prices or pre-sale estimates, with this effect being more pronounced when the time between auctions is short. The endowment effect reveals that bidders assign greater psychological value to their preferred artworks, making them willing to pay higher prices. Overall, these behavioral biases notably impact the market pricing of artworks, driving auction prices higher. This study integrates behavioral economics, art management, and statistical analysis to offer practical recommendations for auction houses to optimize bidding strategies, for buyers and sellers to make informed decisions, and for market regulators to develop effective policies.