The leading paradigm in macroeconomics assumes that economic agents (households, firms, investors) are perfectly rational in making their decisions. Experimental evidence and common sense indicate that this assumption is often too demanding. This course focuses on the analysis of macroeconomic models under bounded rationality, where agents violate full rationality but behave more in accordance with experimental evidence. The economy is viewed as a complex system with interacting boundedly rational heterogeneous agents. A central question will be: which emerging aggregate macro behavior arises through the interactions of individual decisions of boundedly rational heterogeneous agents at the micro level?
- C.H. Hommes (2013). Behavioral Rationality and Heterogeneous Expectations in Complex Economic Systems, Cambridge University Press, http://www.cambridge.org/gb/knowledge/isbn/item694...
- De Grauwe, P. (2012). Lectures on Behavioral Macroeconomics, Princeton University Press, http://press.princeton.edu/titles/9891.html
- C.H. Hommes (2021), Behavioral & Experimental Macroeconomics and Policy Analysis: a Complex Systems Approach, Journal of Economic Literature, forthcoming.
- Selected papers