Experience and brokerage in asset markets: evidence from art auctions

Focusing on the art market, where auction houses act as brokers between art sellers and buyers, we investigate whether more experienced brokers achieve better performance as information providers and matchmakers. We use a unique data set of auctions of Italian paintings in various houses around the world, and we measure experience as the number of times an auction house has auctioned the artworks of a certain artist in a given location. We find that more experienced brokers (i) are more likely to achieve a sale and (ii) provide more precise pre-sale estimates. These findings suggest that experience plays an important role for brokers to reduce illiquidity and opacity in markets with asymmetric information, above and beyond the role played by reputation and market share.