Conventional wisdom suggests that the equilibrium stock price is not affected by investor sentiment, and the equilibrium price at an early time is higher than the one at a later time. In contrast to this wisdom, we present a dynamic asset pricing model with investor sentiment and we find that...

In the spirit of beauty contests, we study the effect of higher order expectations on sentiment asset pricing. The sentiment asset pricing model with higher order expectations shows that, in general the higher sentiment causes the higher price, but, higher order expectations contribute to...