Questions tagged [bounded-rationality]

Analysis in which the ability of agents act rationally is constrained in one or more respects. Commonly employed in behavioural economics.

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Does a monopolistically competitive market outcome involves assuming rational expectations?

E.g. When Grazzini et al. (2014) discuss a "monopolistically competitive outcome" (MC) in their paper ($2.1), which is based on Dixit-Stiglitz's model, 1977, does this outcome involve assuming ...
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Are heterogenous expectations models still determinate, closed models?

Cars Hommes proposed many models based on agents having heterogeneous expectations. Agents switch between a fixed set of prediction rules depending on their forecast error history. However, it seems ...
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Does the law of motion remain constant in a rational expectation model? Does it constantly change in a boundedly rational agent framework?

Is the following true? The rational expectations hypothesis also implicitly assumes that the law of motion of the economy does not change, which actually is a self-fulfilling assumption as long as ...
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Inertia and rational expectations DSGE models

What types of inertia or other phenomena in the data are hard to model with New Keynesian or other DSGE models assuming rational expectations?
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What is steady state learning in the context of boundedly rational expectation modeling and how does it differ with other theories of learning?

What is steady state learning in the context of boundedly rational expectation modeling? E.g. see Evans et al. (2009) They define it as: "Under steady-state learning, agents use past data to ...
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Why don't more people use adblockers?

Economists are fond of posing "puzzles", for example the "annuity puzzle" (why don't more people buy annuities). I wonder if any economists (or other social scientists) have, in similar spirit, ...