X-Message-Number: 30720
From: David Stodolsky <>
Subject: Fully rational price-setting
Date: Sun, 27 Apr 2008 22:11:50 +0200


"Psychological evidence and casual intuition predict that sunny  
weather is associated with upbeat mood. This paper examines the  
relation between morning sunshine at a country   s leading stock  
exchange and market index stock returns that day at 26 stock exchanges  
internationally from 1982-97. Sunshine is strongly significantly  
correlated with daily stock returns. After controlling for sunshine,  
rain and snow are unrelated to returns. There were positive net-of- 
transaction costs profits to be made from substantial use of weather- 
based strategies, but the magnitude of the gains was fairly modest.  
These findings are diffcult to reconcile with fully rational price- 
Hirshleifer and Shumway (2001)

David Stodolsky    Skype: davidstodolsky

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