Speculative trading and bubbles: Evidence from the art market

J.N.G. Penasse, Luc Renneboog

Research output: Contribution to journalArticleScientificpeer-review


We argue that extrapolative expectations drive boom-bust cycles in the postwar art market. Price run-ups coincide with increases in demand fundamentals but are followed by predictable busts. Predictable changes account for about half of the variance of five-year price changes. High prices coincide with many attributes of speculative bubbles: trading volume, the share of short-term trades, the share of postwar art, and volatility are all higher during booms. In addition, short-term transactions underperform long-term transactions. Survey evidence further confirms the link between beliefs, prices, and volume dynamics as in models in which extrapolative beliefs fuel speculative bubbles.

Original languageEnglish
Pages (from-to)4939-4963
JournalManagement Science
Issue number7
Publication statusPublished - Jul 2022


  • art market
  • bubbles
  • return predictability
  • auction
  • trading volume


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