Policy-makers are currently debating whether asset-pricing dynamics can, or should, be managed in the public interest. This initiative delves into the mechanisms of asset pricing to learn how to detect when and why bubbles emerge and how consequences can be mitigated. In its 2nd year, the...

The central formula in asset pricing relates the price of an Arrow-Debreu security to an investor's preferences and beliefs: Price of an Arrow-Debreu security = Preferences Beliefs. We observe the prices of Arrow-Debreu securities in the option markets. But we do not directly observe the extent...