No. 575 - Bounded rationality and expectations in economics

by Ignazio Visco and Giordano Zevi
July 2020
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Starting from Simon's bounded rationality notion, here we consider some of the links between concepts of bounded rationality and the approaches followed by economists in their analysis of the role played by economic agents' expectations in driving the evolution of the economy through time. This contribution is forthcoming as a chapter in "Handbook of Bounded Rationality", R. Viale (ed.), Routledge, London.

The degree of attention devoted to the formation of expectations by the macroeconomic theory has followed high and low cycles. In recent years, the increasing availability of survey data and the failings of models based on purely rational representative agents have prompted renewed interest in inquiries into the direct measurement of expectations and empirical studies of their formation. The intellectual legacy of Herbert Simon provides a useful guide for both these activities.

Published in: R. Viale (ed.): Routledge Handbook of Bounded Rationality, London, Routledge 2021

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  1. 28 July 2020
    No. 575 - Bounded rationality and expectations in economics
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