Mohammed (Mo) Kaddouhah
PhD Candidate; Centre for Applied Microeconomics, Swansea University
School of Social Sciences, Department of Economics
Wales, United Kingdom
Email: 2030299 (at) swansea.ac.uk
Centre for Financial Economics and Decision Theory (CFEDT)
Email: mk (at) cfedt.org
A FOMO-based Capital Asset Pricing Model, with Simon Rudkin, and Wanling Rudkin. 2025.
Investors experience a Fear of Missing Out (FOMO) when observing peers’ investment choices outperforming their own. Agents require compensation for holding stocks that deliver lower expected returns than the equities held by their peers. This paper provides a theoretical and empirical introduction to the FOMO Capital Asset Pricing Model (FOMO-CAPM). Analysis of US equities between 1980 and 2024 shows FOMO is a significant determinant of asset prices. An annualized FOMO risk premium of 21.4% is demonstrated. The explanatory power of FOMO for stock returns is robust to a battery of alternative peer group portfolios, risk exposure controls and sub-period analyses.
Presented at:
VIECO 2026 - Vienna-Copenhagen Conference on Financial Econometrics: Vienna (Austria), 2026.
EFMA Annual Meeting 2026: Kristiansand (Norway), 2026.
19th INTERNATIONAL ACCOUNTING & FINANCE DOCTORAL SYMPOSIUM: Cagliari (Italy), 2026.
FMA 2026 European Conference: Braga (Portugal), 2026.
BAFA Annual Conference & Doctoral Masterclasses: Birmingham (United Kingdom), 2026.
5th Welsh Postgraduate Research Cluster Workshop: Swansea (United Kingdom, 2025.
South West Area Group (SWAG) Annual Conference 2025: Swansea (United Kingdom), 2025.
Behavioural Finance Working Group: London (United Kingdom), 2025.
Faculty of Humanities and Social Sciences Postgraduate Research Conference. Swansea (United Kingdom), 2025.
An economic definition of ‘Fear of Missing Out’ (FOMO), 2024, Finance Research Letters, 63, 105344.
This research note proposes a decision theoretic definition of the popular phenomenon of Fear of Missing Out (FOMO). Our definition assumes that FOMO causes individuals to base their decision-making utility on their own anticipated regret and the decisions made by individuals in their social peer group. We use an example related to asset trading in order to illustrate how to analyse decision-making under FOMO preferences and to highlight differences with the concept of regret aversion.