Auctioning Infamous Items: Why The Madoff Wine Auction Might Turn Sour

If you like offbeat, oddball or funky historical collectibles, today is your day. The U.S. Marshals Service is holding two auctions in an effort to sell the personal belongings of two men with notorious histories, Bernard Madoff and Ted Kaczynski, aka the Unabomber.

Lot #450 Est. Price $3,200-3,800 - Château Mouton-Rothschild (1996) 12 bottles
Lot #450 Est. Price $3,200-3,800 - Château Mouton-Rothschild (1996) 12 bottles

The announcement that the contents of convicted Ponzi schemer Bernard Madoff’s wine cellars would be auctioned off by Morrell & Co Fine Wine Auctions had wine lovers across the country buzzing.

Madoff is currently serving a 150-year sentence for defrauding clients of $65 billion. The auction, closing today, is part of an ongoing effort by U.S. Marshals to raise money for the victims of Madoff's fraud.

Surely a guy who knew how to swindle billions would know how to navigate his way through a wine store right? Based on what’s being auctioned, not so much.

"It doesn’t strike me as a cellar of a guy who cared much about wine" says Ray Isle, the Executive Wine Editor of Food & Wine magazine. "The collection is so random. It’s a lot of individual bottles, the sign of a guy who received a lot of bottles of wine as a gift."

A key question for Isle? The condition of the wine.

"It’s a crapshoot. In this case, you just don’t know how it’s been treated and stored."

Morrell's makes it clear on their Web site that a lot of the items being auctioned are below their usual standard.

"As artifacts of history they are unique, which is why we have chosen to offer all the bottles seized, including those that normally wouldn't past muster and make it into our auction," the company writes.

Lot #488 Est. Price $10-10
Lot #488 Est. Price $10-10

The collection is surprisingly run of the mill, though there are some exceptions which run the gamut from good, puzzling and just plain odd.

The Good: A case of 12 bottles of a 1996 Chateau Mouton-Rothschild Bordeaux.

The puzzling: three two-ounce sized bottles of Bombay Dry Gin, Grand Marnier and Smirnoff Vodka. A man with a net worth of more than $800 million hoarding the minibar bottles?

The just plain odd: an 8½ inch tall, 12-sided crystal decanter with a wax seal over the cork.? The brown liquid inside? Unknown.

The other high profile auction, which starts today, revolves around Ted Kaczynski, who is currently serving a life sentence without possibility of parole. Kaczynski pled guilty in 1998 to killing three people and injuring 23 others in a series of explosions. The items up for auction here are largely mundane. They include his typewriter, handwritten notes, bows and arrows, a dog-eared manual for wilderness survival, his Harvard diploma, his shoes and other well-used tools.?

The auction is being conducted for the Marshals by GSA Auctions and all proceeds will go to the victims’ families. The auction closes on June 2.

So why would someone buy airline-size booze bottles or a worn-out survival guide?

Academics George Newman, Gil Diesendruck and Paul Bloom recently set out to answer that question.

In a series of studies published in the Journal of Consumer Research, they discovered these situations are driven by "Celebrity Contagion," or the belief that a person’s immaterial qualities or essence can be transferred to an object through physical contact."

In non-academic terms: it means consumers will pay more for that used Eric Clapton guitar because the guitar god himself touched it. Even if the object has little functional value or is indistinguishable from similar items on the market, they’ll not only choose the celebrity-linked item, but often pay above market value.

Lot #473 Est. Price $60-90 - 12 Sided Crystal Decanter
Lot #473 Est. Price $60-90 - 12 Sided Crystal Decanter

"We found people are generally willing to pay more for something, even if they can’t sell it later," says Newman, a postdoctoral Associate in Marketing at the Yale School of Management. "People won’t put a price on the idea the celebrity is rubbing off on them."

How else to explain someone paying $48,875 for a tape measure or $21,850 for a set of books on Cape Cod? You wouldn’t, unless those items were once owned by President Kennedy (and auctioned as part of the estate of Jacqueline Kennedy Onassis in 1996).

But what happens when the items for sale are associated with a less-than-positive person??In these cases, the contact with a despised individual actually decreases the item's value.

"In these types of auctions, emotions largely don’t play a part, they tend to purchase for economic reasons, not sentimental reasons," says Newman. "They think, or hope, they can sell these to someone else down the line."

In some sense the reasoning is circular. People perceive that the items might have economic value to someone else even though for them personally, the contact with the despised person actually decreases the item's value in their mind.

"You buy the item not because you really want it, but because you hope to sell it. But of course, if everyone thinks that way, you might not be able resell it at a higher value."

So what can we expect out of the Madoff and Kaczynski auctions?

With Madoff, Newman guesses there likely won't be a lot of bids much above the listed prices.

"The alcohol being offered won’t be enough of a bargain to boost the price levels," he predicts.

As for Kaczynski, Newman guesses the items the Unabomber had less contact with will actually sell for more on average than those things with which he had frequent contact.

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