Although generous return policies have been shown to have marketing benefits, such as a higher willingness to pay and a higher purchase frequency, counterbalancing these benefits is an increased volume of consumer returns, which presents significant operational challenges for both retailers and...

Two broad classes of consumption dynamics - long-run risks and rare disasters - have proven successful in explaining the equity premium puzzle when used in conjunction with recursive preference. We show that bounds a-la Gallant, Hansen and Tauchen (1990) that restrict the volatility of the...

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This paper proposes an explanation of the international home bias in equity based on ambiguity aversion. Doubts imply an additional hedging motif driven by the interaction between real exchange rate risk and ambiguity aversion. What matters is the long-run as opposed to the short-run risk....

The stock wealth-consumption ratio reflects expected stock returns and consumption growth. Because consumption growth is mostly unpredictable, much of the variation in this ratio likely reflects changing expected stock returns. In contrast, isolating expected stock return information from other...