Pricing Dynamics and Herding Behavior of NFTs

E-print/Working paper (2023)

Non-fungible tokens (NFTs) took the digital art space by storm in 2021, generating massive amounts of volume and attracting a large number of users to a previously obscure part of blockchain technology ... [more ▼]

Non-fungible tokens (NFTs) took the digital art space by storm in 2021, generating massive amounts of volume and attracting a large number of users to a previously obscure part of blockchain technology. Still, very little is known about the determinants that contribute to NFT pricing and the market dynamics. This paper attempts to evaluate these factors analyzing 860,067 art NFTs that have been deployed on the Ethereum blockchain and have been involved in 317,950 sales. We introduce a first-of-its-kind ranking system for NFT artists, adding a novel dimension to our analysis. Our results suggest that market liquidity and intrinsic value strongly predict average price of NFTs. Contrarily, social media activity surprisingly shows a negative association with NFT prices. We also uncover the dominance of a small group of artists, demonstrating the pronounced 'superstar effect' and herding behavior within the NFT market. This market dynamic, however, shows signs of shifting towards independent decision-making during extreme market volatility. [less ▲]

Institutional Investors and Infrastructure Investing

in Review of Financial Studies (2021), 34(8)(3880-3934),

Strategic bias and popularity effect in the prediction of economic surprises*

in Journal of Forecasting (2020)

Gendered prices

in Review of Financial Studies (2020)

Reliability and relevance of fair values: private equity investments and investee fundamentals

in Review of Accounting Studies (2019), 24(4),

Reliability and Relevance of Fair Values: Private Equity Investments and Investee Fundamentals

in SSRN (2019)

The Subsidy to Infrastructure as an Asset Class*

E-print/Working paper (2018)

The Performance of Marketplace Lenders:

E-print/Working paper (2018)

Blockchain, Fractional Ownership, and the Future of Creative Work

E-print/Working paper (2018)

While record-making prices at art auctions receive headline news coverage, artists typically do not receive any direct proceeds from those sales. Early-stage creative work in any field is perennially ... [more ▼]

While record-making prices at art auctions receive headline news coverage, artists typically do not receive any direct proceeds from those sales. Early-stage creative work in any field is perennially difficult to value, but the valuation, reward, and incentivization for artistic labor are particularly fraught. A core challenge in studying the real return on artists’ work is the extreme difficulty accessing data from when an artwork was first sold. Galleries keep private records that are difficult to access and to match to public auction results. This paper, for the first time, uses archivally sourced primary market records, for the artists Jasper Johns and Robert Rauschenberg. Although this approach restricts the size of the data set, this innovative method shows much more accurate returns on art than typical regression and hedonic models. We find that if Johns and Rauschenberg had retained 10% equity in their work when it was first sold, the returns to them when the work was resold at auction would have outperformed the US S&P 500 by between 2 and 986 times. The implication of this work opens up vast policy recommendations with regard to secondary art market sales, entrepreneurial strategies using blockchain technology, and implications about how we compensate creative work. [less ▲]

Alternative Investments, Special Issue of the Journal of Empirical Finance

Book published by Elsevier (2017)