We hypothesize the existence of a slow-moving fad component in art prices. Using unique panel survey data on art market participants' confidence levels in the outlook for a set of artists, we find that sentiment indeed predicts short-term returns

We study price determinants and investment performance of art based on a vast sample of transactions around the world over the past 60 years. Art has appreciated at a real (nominal) annual return of 2.49% (6.24%). Higher art returns are reached for paintings at high-end of the price...