The relationship between art and finance has been widely discussed in a number of symposia and workshops, as well as columns on the financial press. Many major universities have activated degree and master programs aimed at training professionals for the art business.

  There is controversy on the current tendency of turning art into a business; a tendency favored by the marketing techniques applied to the promotion of artists and their work, and the creation of investment funds specializing in art. The discussion is about the effects that the rapprochement between art and finance will have on artistic creation. Art is in fact conceived to express an emotion, a sensation, something deeply rooted in human experience, not something made to quench passing fashion fads. There is fear that the development of the art market, where seven figures have become the norm, can have a negative influence on artistic productions.

  The art market is a place where different kinds of agents meet with the aim of satisfying very different types of needs. At one extreme, you have the private collector buying art in order to satisfy a deep-seated psychological need, on the basis of her/his emotions, tastes, passions. To the other extreme, there are investment funds, which aim at satisfying a financial imperative. According to this perspective, just like any other financial asset, a work of art gets bought only if people think it can be sold in the future more dearly for profit.

  In between the extremes of pure collectors and art funds, there is a wide range of agents, some of whom perform services of art art advisory for banks. In this case, the decision on which works to buy is entrusted to experts, and usually only a few pieces are kept in-house, while the remainder is leased out to make the art investment profitable.

  There is a lot of talk about the art market evolving toward higher efficiency and transparence, and there are those who look forward to the market being moved online. But the art market does not behave like traditional economic theories dictate, since most investors don't look at art the same way they look at other assets. In fact, only 1% of the art market is made by art funds and investors clubs. Their impact is thus negligible. On the other hand, private collectors, the majority of the market, hold onto art works for three decades on average, and the main reasons pushing them to sell are the so-called three Ds (death, debt, and divorce), rather than the motivation of making a profit.

  Perhaps the theoretical framework which is most applicable to the art market is that put forward by behavioral finance, which locates the cause of inefficiency in financial markets in the diversity of behaviors among classes of investors. People, and investors among them, are not totally rational. Decisions are often affected by cognitive biases, like the so called ex-post bias, whereby attained results are held as standards and the wrong assumption is made that initial expectations had to be close to achieved values; emotional biases, by which in group contexts individuals tend to abandon certitudes and inhibitions and are brought to share common emotions, to the point of carrying out extreme actions. These kinds of distortions determine inefficiencies and price anomalies.

  And the actors on the art market are even more heterogeneous than those betting on financial markets. Efficiency then seems a remote, and not necessarily desirable, target. What matters is rather discussing ways to devise control mechanisms that protect the market from the manipulation of a few agents to the detriment of the many.