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| Type | Master's Thesis |
| Scope | Discipline-based scholarship |
| Title | (Ir-)Rational Behavior or Brilliant Instinct? - How Tokenization of Luxury Goods reshapes the Financial Landscape and affects Behavioral Biases |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 88 |
| Date | 2022 |
| Zusammenfassung | Luxury. It is art applied to functional objects. It is made to the highest perfection. It embodies the ideals seen from afar. Luxury defines beauty. It is beauty (Kapferer, 1997, p. 253). And it is a trillion-dollar business. With an expected global market size of EUR 1.14 trillion in 2021 and with luxury cars, luxury hospitality, and personal luxury goods accounting for 80% of the overall luxury industry, the sector is expected to continue growing (D’Arpizio et al., 2022, pp. 2, 7). (Physical) luxury goods are acquired and consumed because of their functional, financial, social, and individual value added to consumers (Wiedmann et al., 2007, 2009). Due to their great popularity, the prices of luxury goods increased and multiplied strongly over the last few years (Bennett et al., 2022, p. 85). As an alternative investment class, financial investments in luxury items diversify a portfolio and preserve value (value-maintaining) and/or enhance value (yield-producing). For a long time, however, access to and ownership of (physical) high-end luxury goods – and thus, the added value (Wiedmann et al., 2007, 2009) and alternative investment advantage of those goods – were exclusively reserved for high-net-worth individuals (HNWIs). The introduction of traditional capital markets made the luxury industry accessible to also non-HNWIs. Not by physically acquiring the luxury goods but by buying stocks of the luxury firms. It made it possible for a broad mass to participate, at least, in the overall success of the sector. In recent years, a new phenomenon has gained attention and reshapes the financial land-scape: tokenized luxury goods. Tokenization can make hard-to-access and illiquid luxury goods accessible for non-HNWIs, and let them participate in the underlying luxury item’s entire value (Sygnum Bank AG, 2021a). With tokenization, a(n) (in-)tangible asset is represented by a token that runs on a blockchain (Stefanoski et al., 2020, p. 12). Blockchain technology is one of the most crucial innovations in this century (Schär & Berentsen, 2020, p. vii). Since the tokenization of luxury goods is still an emerging concept, many people and luxury companies have limited knowledge and experience. However, as real-world examples show, they are interested in the topic. The investment opportunities are almost limitless, from tokenized luxury cars, premium wines, Picasso artworks to tokenized digital luxury collectibles. When it comes to investment decision-making in cryptocurrency markets, various studies (Ballis & Verousis, 2022) show evidence that consumers rely on heuristics and rules of thumb, and thus, are influenced by behavioral biases. Market data of certain analyzed tokenized luxury goods indicate both, herding behavior and a buy-and-hold strategy. |
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