12 Risk and Uncertainty in the Art World
hold important clues to understanding the current market while providing lessons for the future. Chapter 7 by Marina Bianchi treats art from the consumer perspective by considering the impact of demand uncertainty and what drives consumer choice of creative goods. The chapter analyses the importance of fashions and longer-term trends as well as fads and shorterterm changes and how they impact the formation of collective tastes and market value. Along with other authors in this volume, Bianchi argues that uncertainty is inextricably linked to art, which she innovatively characterises as depending on the core factors of novelty, variety and complexity – each discussed in detail here. She draws on recent research in economics and consumer behaviour as well as in the dynamics of aesthetic preferences from experimental psychology to provide a new theoretical framework for understanding what art is in relation to how it is consumed. Given that extremely uncertain demand is one of the key challenges facing all participants of the art world, this chapter provides important insights into the sources and structure of consumer decision-making with implications for how uncertainty, and its risks, might be managed. This is relevant for a range of art world consumers, from investors who are systematically trying to manage their risk exposure, to collectors who are more interested in the intrinsic pleasures of the artwork itself. In Chapter 8, Rachel A. J. Pownall considers the spectrum of people who are engaged in the art world and the variety of reasons for their acquiring and owning art, ranging from investment-driven ‘rational’ reasons to aesthetic or ‘emotional’ ones. While drawing on real-world practices, the chapter provides a theory and formal economic model of the trade-offs experienced by different types of consumers – including holding art in a diversified portfolio of assets as opposed to outright ownership of works, for example in the context of a collection. The chapter explains in detail the specifics of what can be termed ‘emotional assets’, of which art is a prime example. It draws upon psychology and marketing literature as well as cutting-edge research in economics and finance which analyses non-standard assets. Pownall elucidates how assets such as art have particular qualities which distinguish them from many other goods and commodities. She aims to provide a framework in which the emotional or affective
9781472902900 Risk and Uncertainty in the Art World (927h) final pass.indd 12
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