As long-time readers know, I like to conduct experiments with my students to test the notion that a group is able to make more informed judgments than any single expert. Last fall’s experiment, involving the Klimts in the fall sales, was a stellar success. Our first experiment of 2007, concerning the Van Gogh in last week’s auction, was an unmitigated bust, since no one allowed for the possibility that the painting would find no buyer. But now I have good news that will restore your faith in the wisdom of crowds.
Four weeks ago, I asked the students to write down their guess for the hammer price of Francis Bacon’s “Second Version of Study for Bullfight No. 1.” The painting was bid up this Wednesday to $41 million (plus commission). The median estimate returned by the roughly 60 students was $42 million. Although their estimates ranged from $7 million to $120 million, no fewer than five of them got within a million dollars of the price. Maybe this technique should be used more broadly in setting sales estimates?