This study aims to model institutional investor behavior in the XCAPM model underthe premise of reflecting a more detailed decomposition of investor types in equitymarkets. We explore the behavior and its impact in the model, esp. on pricing andon key financial ratios. We observe that the prevalence of the institutional investorcounteracts extrapolator’s effects, resulting in lower volatility of price dividendratio, lower predictive power of changes in consumption for future price changesand lower equity premium