Seasonally Varying Preferences: Theoretical Foundations for an Empirical Regularity

B-Tier
Journal: Review of Asset Pricing Studies
Year: 2014
Volume: 4
Issue: 1
Pages: 39-77

Authors (4)

Mark J. Kamstra (not in RePEc) Lisa A. Kramer (University of Toronto) Maurice D. Levi Tan Wang (not in RePEc)

Score contribution per author:

0.503 = (α=2.01 / 4 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We investigate an asset pricing model with preferences cycling between high risk aversion and low EIS in fall/winter and the reverse in spring/summer. Calibrating to consumption data and allowing plausible preference parameter values, we produce returns that match observed equity and Treasury returns across the seasons: risky returns are higher and risk-free returns are lower or stable in fall/winter, and they reverse in spring/summer. Further, risky returns vary more than risk-free returns. A novel finding is that both EIS and risk aversion must vary seasonally to match observed returns. Further, the degree of necessary seasonal change in EIS is small.

Technical Details

RePEc Handle
repec:oup:rasset:v:4:y:2014:i:1:p:39-77.
Journal Field
Finance
Author Count
4
Added to Database
2026-01-25