DECLINING VALUES AND THE AFTERNOON EFFECT - EVIDENCE FROM ART AUCTIONS

We study rite order of sale in art auctions. The final bid relative to the auctioneer's estimated price declines throughout the course of an auction. A theoretical model shows that in an auction ordered by decl ining valuation, even in the presence of risk-neutral al strategic bid ders, the price received relative to the estimate for later items in a n auction should be less than the price relative to the estimate for e arlier items. Furthermore, ordering heterogeneous items by value maxim izes revenue for the auctioneer.