We review the recent literature on rational inattention, identify the main theoretical
mechanisms, and explain how it helps us understand a variety of phenomena across fields …

The rational expectations hypothesis is a bedrock of modern macroeconomics. It is often
combined with a strong, complementary hypothesis that all data about the state of the …

This paper analyzes how bounded rationality affects monetary and fiscal policy via an
empirically relevant enrichment of the New Keynesian model. It models agents' partial …

Consumers rely on the price changes of goods in their grocery bundles when forming
expectations about aggregate inflation. We use micro data that uniquely match individual …

Personal experiences of economic outcomes, from global financial crises to individual-level
job losses, can shape individual beliefs, risk attitudes, and choices for years to come. A …

How does the economy respond to news about future policies or future fundamentals?
Standard practice assumes that agents have common knowledge of such news and face no …

We study the relationship between homebuyers' beliefs about future house price changes
and their mortgage leverage choices. Whether more pessimistic homebuyers choose higher …

This survey discusses behavioral and experimental macroeconomics, emphasizing a
complex systems perspective. The economy consists of boundedly rational heterogeneous …

We develop a tractable method for augmenting macroeconomic models with autonomous
variation in higher‐order beliefs. We use this to accommodate a certain type of waves of …

The stock market is volatile, as is aggregate economic activity, and the two are connected. At
least since Burns and Mitchell (1938), we know that measures of investment and production …