We show that if sophisticated institutional managers and individual investors perceive tail-risks differently, then a new explanation for the pricing kernel puzzle emerges. We show, by example, that even a tiny difference in tail-risk perception by the two investor types can explain the pricing...

Frontmatter -- Contents -- Preface to the Paperback Edition -- Preface to the First Edition -- Introduction -- Chapter 1. The Great Moderation -- Introduction -- Birth: Calm after the Storms -- Life: The Great Risk Shift -- Death: The Dissenters and Their Vindication -- Reanimation: A Global...