A puzzle in

economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...

is a situation where the implication of theory is inconsistent with observed economic data. An example is the

equity premium puzzle The equity premium puzzle refers to the inability of an important class of economic models to explain the average equity risk premium (ERP) provided by a diversified portfolio of U.S. equities over that of U.S. Treasury Bills, which has been obser ...

, which relates to the fact that over the last two hundred years, the

risk premium A risk premium is a measure of excess return that is required by an individual to compensate being subjected to an increased level of risk. It is used widely in finance and economics, the general definition being the expected risky return less t ...

stock In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...

s over bonds has been around 5.5%, much larger than expected from theory. The equity premium puzzle was first documented by Mehra and Prescot (1985).

List of puzzles

Equity premium puzzle The equity premium puzzle refers to the inability of an important class of economic models to explain the average equity risk premium (ERP) provided by a diversified portfolio of U.S. equities over that of U.S. Treasury Bills, which has been obser ...

Home bias in trade puzzle The Home bias in trade puzzle is a widely discussed problem in macroeconomics and international finance, first documented by John T. McCallum in an article from 1995. McCallum showed that for the United States and Canada, inter-province trade is 2 ...

Equity home bias puzzle The Home bias puzzle is the term given to describe the fact that individuals and institutions in most countries hold only modest amounts of foreign equity, and tend to strongly favor company stock from their home nation. This finding is regarded as ...

* Consumption correlations puzzle * Feldstein-Horioka puzzle * Forward premium anomaly * Real exchange rate puzzles *Retirement-consumption puzzle *Missing trade puzzle, also known as Border puzzle {{Economic-term-stub