It’s a scene that’s appeared in many movies. In the crowd of an art auction sits a mystery buyer or someone acting as his agent. This individual is there to bid on unspecified works of art.

What effect does this one individual have on the overall market? A large part of the answer depends on several factors. How wealthy is this person? How much of that wealth is being devoted to the acquisition of artworks? In what part of the art market is this person interested? The answers to these questions reveal a key ratio; available resources to market capitalization. This ratio ultimately determines long term market impact.

Putting the math aside, one must wonder just how much one person could affect a rather sizable market. First; the few times this person has the highest bid he directly causes an increase in price simply by outbidding everyone else. Second, and probably more important; the simple act of bidding, even if ultimately unsuccessful, puts a type of floor on the price. There is virtually no limit on how many times this could occur. Third; whenever this person actually does have the highest bid, that artwork is removed from the market for a considerable length of time. This affects the supply and demand dynamic as it applies to all other potential buyers. Even one single person can have a large impact on the price of a group of assets.