Informational content of presale estimates and hammer prices in classic car auctions

We study the informational content of presale estimates and hammer prices in classic car auctions. To do so, we investigate two main axes, being the accuracy and the uncertainty of auction experts in setting presale estimates. We use a dataset constructed of auctioned Ferraris from the “Classic Car Yearbooks” spanning from 2006 until 2016. Regarding the accuracy axe, we find that experts do not provide good predictions of realized prices and that there is a difference in estimations between auction houses. However, the bias stays relatively small. We observe that the uncertainty of experts is increased by the characteristics: single owners, well-identified owners, famous owners, Ferrari 250 and cabriolet. Nevertheless, the experts’ confidence in setting presale estimates increases for more expensive cars. Moreover, we study the predictability of observing ‘no sales’, sales below the minimum estimated price and sales above the maximum estimated price. A large relative spread and famous owners seem to decrease the probability of ‘no sale’. Whereas, more expensive cars seem to be harder to sell. For cars sold below the minimum estimated price, we found that a larger relative spread, famous owners and a certificate of Ferrari Classiche reduce the probability of being sold below the minimum estimated price. On the other hand, more expensive cars increase the probability of being sold below the minimum estimated price. Additionally, cars having a certificate, famous owners or just a single owner increases the probability of selling above the experts’ high presale estimate. Conversely, more expensive cars and larger spreads reduce this probability.