Digitalization as a factor increasing information asymmetry in the art market

The article is devoted to the application of a general theoretical approach to the formation of prices for works of art, mainly visual art. Methodologically, the study is based on the abstract theoretical developments of economic science from the classical school to the neoclassicals, supplemented by modern institutional theory. The author hypothesizes that pricing in the art market is subject to general theoretical laws, but it has always had its own characteristics. Under the influence of digitalization and the development of artificial intelligence, the final price of works of art is increasingly disconnected from their underlying value, compared to regular goods and services. This trend has been attributed to the increasing asymmetry of information in the art market. The author revealed the specifics of this information asymmetry, which manifests itself not so much in the potential buyer’s lack of knowledge about the range of prices for works of art, but rather in their uncertainty about their own competence regarding their artistic or historical value. It has been proven that this opens the door for manipulators who exploit the guilt feelings of those who lack an understanding of the aesthetic foundations of contemporary art. In the course of the analysis, the hypothesis was confirmed. The study was conducted taking into account the rare effects that lead to both buyers and sellers being interested in high prices. Among the factors that have a decisive influence on the formation of prices for works of art, the evaluation judgment that determines the quality and uniqueness of the product has been highlighted. It has been established that the evaluation judgment is influenced by a variety of other parameters that are often only indirectly related to the artistic, aesthetic, and historical merits of the object of sale. It has been revealed that the art market is a market with asymmetric information, which leads to negative selection and negative externalities. The presented results can be useful not only for researchers, but also for sellers and buyers of artworks.