Abstract
This is a summary and interpretation of some of the literature on stock price volatility that was stimulated by Leroy and Porter (1981) and Shiller (1981a). It appears that neither small sample bias, rational bubbles nor some standard models for expected returns adequately explain stock price volatility. This suggests a role for some nonstandard models for expected returns. One possibility is models in which noise trading by naive investors is important. At present, however, there is little direct evidence that such fads play a significant role in stock price determination.
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