Abstract
It is an unfortunate, yet unmistakable fact that human life can sometimes be unusually painful: loss of loved ones, divorce, critical medical issues just to name a few. I introduce the notion of 'dis-utility shocks': rare but large negative deviations from consumption-based utility level, to represent such uncommon adversities. I adjoin dis-utility shocks to a standard consumption-based asset pricing model and develop a method to compute their impact on asset prices numerically. Despite their idiosyncratic nature, calibration results indicate that dis-utility shocks affect asset prices in ways that address the main puzzles regarding stock price movements.
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