Observable persuaders : a longitudinal study on the effects of quality signals in the contemporary visual art market

Information about the quality of producers or products has strategic value and affects economic decisions. But what happens in markets where there is extreme uncertainty because quality is difficult to observe directly and objective criteria to make quality judgments are lacking? In markets where information about quality is incomplete and imperfect, signals (as reviews, awards, exhibitions, subsidies, art gallery affiliations) are useful in helping to reduce uncertainty. At the same time, signals also shape quality perceptions buyers and intermediaries have about producers who are the subject of the signals. And this may create a competitive advantage for some producers, which may translate into long-term differential effects on their performance outcomes compared to other competitors. The core focus of this thesis is on gaining a fine-grained understanding of the effects of signals on producers’ performance outcomes, and specifically on persistence in performance created by self-reinforcing feedback loops initiated by initial advantages from early career signals and/or from signals in later stages of competitive activity. In the empirical setting of the primary market for contemporary visual art, the career trajectories of 1590 visual artists from two art institutions (the Gerrit Rietveld Academie and the Rijksakademie van beeldende kunsten) in the Netherlands are studied. The empirical results show strong self-reinforcing processes governing competitive dynamics.