Is there a premium for legacy artists? The death effect in exhibition shows and auction transactions

This article examines how an artist's death influences exhibition activity and auction prices, providing new insights into artistic legacy and postmortem market dynamics in the visual arts. Using a panel dataset of exhibition histories and auction transactions for a sample of prominent artists born after the twentieth century, we employ regression discontinuity and event-study designs to identify causal effects. We find that an artist's death leads to a significant temporary decline in exhibitions, which we attribute to increased transaction frictions, including search costs and legacy management challenges. In contrast, a significant postmortem price premium emerges in auction markets, consistent with idea of scarcity and finite supply. The magnitude of this premium varies substantially by legacy artist characteristics: young, low-reputation artists experience the highest price increases, suggesting buyers anticipate future appreciation in reputation. These findings contribute to the empirical literature on auction pricing, reputation effects, and transaction costs in cultural markets, offering broader implications for asset markets where supply constraints and information asymmetries shape long-term valuation.