SFS Cavalcade North America 2026
Darden Graduate School of Business Administration, University of Virginia
May 18-21, 2026
Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
Please note that all times are shown in the time zone of the conference. The current conference time is: 18th Apr 2026, 05:21:06am EDT
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Agenda Overview |
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Track T3-6: Asset Pricing: Theory
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Heterogeneous Beliefs, Asset Prices, and Business Cycles 1UCLA; 2Purdue; 3PUC This paper develops a complete-market production economy with heterogeneous beliefs about TFP growth. Hiring occurs before TFP is known and is, therefore, risky (operational leverage). The firm's discount factor depends on a wealth-weighted average of investors' beliefs. Waves of optimism influence asset markets and percolate to labor hiring, tying together the equity premium, equity volatility, and labor volatility puzzles. A taxonomy of belief systems shows that only extrapolative beliefs amplify the volatility of asset prices and hours and lead to risk build up. Disciplined by survey data, the model matches asset-pricing and business-cycle moments, highlighting how heterogeneous beliefs can be a direct driver of aggregate fluctuations.
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