Bounded Rationality in Macroeconomics

Focusing on a new development in economic theory which involves bounded or limited rationality, the author describes two laboratory experiments that test versions of his macroeconomic models. He analyzes some promising applications of the methods surveyed, as well as their limitations. 48 line figuresPRIZES:Winner of Thomas J. Sargent is the recipient (with Christopher Sims) of the Nobel Prize in Economics 2011.