Auction Prices and the Weather: New Evidence from Old Masters
31 Pages Posted: 28 Aug 2010
Date Written: August 26, 2010
Psychological evidence predicts that sunny weather is associated with an upbeat mood. Although standard economic theory presumes invariant preferences and full rationality, the finance literature has documented a strong relationship between morning sunshine in the city of a country's stock exchange and daily market index returns. In this paper we examine the effect of different weather conditions on art auction selling prices. Our sample includes art prices at auctions conducted from 1786 to 1909 in England. With respect to the main variables identified by the literature as being associated with agents' moods, we find that the length of daylight duration (from sunrise to sunset) on which the auction is conducted has a significant positive effect on the auction selling prices in all our model specifications. In addition, we find in some specifications direct positive effects of hours of sunshine during the day, precipitation, temperature, and whether the daylight duration increases relative to the previous day, on auction selling prices.
Keywords: Auctions, Weather, Mood, Behavioral Economics
JEL Classification: D44, D03
Suggested Citation: Suggested Citation