Artists Finding Galleries: Entrepreneurs Gaining Legitimacy in the Art Market

In many markets, there are mediators whose public evaluations mark that a new entrepreneur has gained legitimacy. Their decision may be influenced by third-party sources signaling about the entrepreneur. We quantitatively study these micro-level processes in the art market, where the artist is the entrepreneur and the art gallery is the mediator. Our results show that it is not the quantity but the diversity of signaling sources, especially highly credible ones, that influence a mediator’s decision. This allows entrepreneurs full access to the market under the consensus that “proper” legitimacy has been gained. Our conclusions are maintained under alternative analyses.