The Popularity Asset Pricing Model

36 Pages Posted: 19 Sep 2019 Last revised: 12 May 2020

See all articles by Thomas M. Idzorek

Thomas M. Idzorek

Morningstar Investment Management

Paul D. Kaplan

Morningstar Canada

Roger G. Ibbotson

Yale School of Management; Zebra Capital Management, LLC

Date Written: May 11, 2020


The Popularity Asset Pricing Model (PAPM) builds on the familiar Capital Asset Pricing Model (CAPM), but relaxes key CAPM assumptions. In the PAPM, investors do not have to be rational, can have risk and non-risk preferences, and have heterogeneous expectations about security returns. By incorporating multiple investor preferences and allowing for diverse investor forecasts, the PAPM takes two major steps towards asset pricing in the real world. The PAPM is nevertheless simple and intuitive, serving as a general umbrella model encompassing not only the CAPM as a special case, but also many other classical and behavioral asset pricing models.

Keywords: popularity, asset pricing theory, CAPM, heterogeneous expectations, behavioral finance, portfolio selection

Suggested Citation

Idzorek, Thomas and Kaplan, Paul D. and Ibbotson, Roger G., The Popularity Asset Pricing Model (May 11, 2020). Available at SSRN: or

Thomas Idzorek (Contact Author)

Morningstar Investment Management ( email )

22 W Washington Street
Chicago, IL 60602
United States

Paul D. Kaplan

Morningstar Canada ( email )

1 Toronto Street
Suite 500
Toronto, Ontario M5C 2W4

Roger G. Ibbotson

Yale School of Management ( email )

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-6021 (Phone)
203-432-6970 (Fax)

Zebra Capital Management, LLC ( email )

2187 Atlantic Street
Stamford, CT 06902
United States
203 701 5900 (Phone)

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