Auctioning Nobel Prizes

On February 24th it was announced that Simon Kuznet’s 1971 medal for the Nobel Prize in Economics will be put up for auction by his 83-year-old son Paul. The sale of Nobel prize medals has become a recent phenomena as both Francis Crick and James D. Watson’s medal sold for over 2 million and 4 million (dollars), respectfully, while Carlos Saavedra Lamas’ sold for $1.16 million and James Chadwick’s for $329,000 (both in 2014). The bidding will begin at $150,000 meaning that the auction will be an ascending bid auction, as potential buyers will successively bid higher and higher until no one will top the maximum offer. This is an interesting good to be selling as the actual worth of the 23-karat medallion is $8,700, this means that any of the astronomically large sums paid for the other medals, such as Crick’s and Watson’s, are valued as such based on the pure prestige of the recipients of the awards themselves. The fact that these medals have varied so widely in selling price makes it difficult to predict how much Kuznet’s medal will sell for. One of a kind collector goods such as a Nobel Prize medal often, due to their uniqueness, cause price wars to ensue, as typically these goods are pure luxury items and can only be acquired by people with a large disposable income. Because of the combined effects of these large incomes and the highly competitive markets that these goods create (due to their rarity), if the medal belonged to someone particularly noteworthy (and the bidding was appropriately competitive) then it seems that the ‘winner’s curse’ could be especially high, based on the nature of the good being auctioned.