Auctioning Obscurity

There are a small number of film poster aficionados who are willing to pay dearly for the rarer examples of their obsession. Roughly 1,000 in number, these men and women appear at auction to bid for art of only rumored or recalled existence, such as a Pulp Fiction poster featuring a Lucky Strike cigarette that’s not allowed to be there. There are numerous factors that make bidding for this kind of item different from bidding for traditional art works or regular goods like we do on eBay, because they are extremely highly priced, target a very small consumer market, and risk a sudden and complete loss of value.

Unlike in the case with famous masterpieces, movie posters are sold at high prices at auction even though remarkably little is known about them. In many cases, not even their designer is known, so how the bidder is valuing the item is unclear. Also unlike in the case of traditional art, movie posters are printed reproductions, so there is no way to tell differences in artisan skill. The article begins to speculate that the topic of the poster is the main indication of value. For example, posters for sci-fi or horror movies from the 1920’s and 30’s seem to fetch the most outrageous prices, particularly if they feature monsters.

An obvious explanation for six-figure prices is an expectation of appreciative value. These bidders might all believe that the value of the good will appreciate beyond what they are willing to purchase the art for. If this is the case, each piece of art is going to the bidder with the highest future evaluation of the poster at a price that is somewhere between the current market value of the poster and the poster’s future value.

But there may be problems with this type of thinking. The entire market for these posters is only 1,000 people deep, and thus is highly volatile. Just because monster posters are valued most highly this year doesn’t mean they will be the most highly valued in fifty. Furthermore, there is nothing to indicate that a market this small and obscure will even be around in fifty years. If these risks are factored into the bidders’ valuation and they are still fetching such enormous prices, we can deduce that the future expected value in the minds of the bidders is even higher than their bids indicate. For further information, see link below:


2 thoughts on “Auctioning Obscurity”

  1. Movie cultures as deep as this one is very hard to wrap your mind around when it comes to purchasing collectables; I doubt the 1,000 people in these auctions are actually in it to make money, but to collect some rare pieces to add to his or her collection. They only auction something when they a) do not have the room b) are told to by a significant other or c) want expand his or her own collection using the funds from the auction.
    The valuation of the goods is far removed from a return-on-investment thinking. Most of these people have no plans on selling the posters the get again. This increases the amount he or she is willing to pay, since they want that piece as their own. They care little if the market for this auction is here in fifty years. Now for those actually auctioning to make money, they play a very high risk game because, like you said, the market is small and highly volatile.

  2. For those looking to resell the posters, this situation is an excellent example of winner’s curse. The winning bidder has to pay an exorbitant amount of money to win one of these popular posters, but if the market changes then that particular type of poster may not be the most desired any longer. If this is the case, then the bidder overpaid for the poster and overestimated the future value. It seems as if the market for movie posters requires more than a little luck if a bidder hopes to turn around and make a profit later.

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