The article explores what determines the extra return investors demand for investing in stocks compared to safer assets. By looking at how producers make decisions, the researchers found that factors like investment risk and costs influence this extra return. When applied to the U.S. economy after World War II, the model predicts a significant extra return for stocks, with market returns and risk-free rates behaving reasonably. The extra return demanded by investors and the market's risk level can change a lot over time. Surprisingly, the model suggests that when stock returns are high, their variability tends to be lower, and vice versa.