There is also another effect, which I call recursive over-valuation. The "high-end" art collectors tend to be extremely wealthy, and - with of course some exce

There is also another effect, which I call recursive over-valuation. The "high-end" art collectors tend to be extremely wealthy, and - with of course some exceptions - wealthy people are wealthy also because they care about money. So, imagine that you are a wealthy art collector and you have just paid - let's say - 100,000 US$ for a painting by an "emerging" artist. It is only human to show off your new painting, and the people you frequent are likely to be also wealthy and art collectors. So, if you have a name as an art collector, that painting soon becomes in your elite a "set point" for the value of the new artist work. The year later, a gallerist that is selling at 115,000 US$ another similar painting of the same artists can well say "Last year TheOtherHobbes bought a similar one for US$ 100,000, and you know him, he wouldn't pay that kind of money if it hadn't this value". And this sets a second precedent, and it goes on. BTW it is all in your interest to "defend" and "promote" the artist (because you defend your investment into it) even if the painting is awful. In a couple of years this way you will be able to re-sell the painting for - still say - US$ 200,000 while having - besides the profit - reinforced your fame as good investor and educated art expert, capable to see the potentiality of the artist ahead of all others...