We analyze the individual and macroeconomic impacts of heterogeneous expectations and action rules within an agent-based model populated by heterogeneous, interacting firms. Agents have to cope with a complex evolving economy characterized by deep uncertainty resulting from technical change, imperfect information, coordination hurdles, and structural breaks. In these circumstances, we find that neither individual nor macroeconomic dynamics improve when agents replace myopic expectations with less naïve learning rules. Our results suggest that fast and frugal robust heuristics may not be a second-best option but rather “rational” responses in complex and changing macroeconomic environments.
- c63 - "Computational Techniques; Simulation Modeling"
- d80 - Information, Knowledge, and Uncertainty: General
- e32 - "Business Fluctuations; Cycles"
- e60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
- o40 - Economic Growth and Aggregate Productivity: General
- EVOLUTIONARY SELECTION
- MARKET IMPERFECTIONS
- OUTPUT GROWTH