Rational Heuristics? Expectations and Behaviors in Evolving. Economies with Heterogeneous Interacting Agents

We analyze the individual and macroeconomic impacts of heterogeneous expecta-tions and action rules within an agent-based model populated by heterogeneous, inter-acting firms. Agents have to cope with acomplex evolving economycharacterized bydeep uncertainty resulting from technical change, imperfect information, coordinationhurdles, and structural breaks. In these circumstances, we find that neither individualnor macroeconomic dynamics improve when agents replace myopic expectations withless naïve learning rules. Our results suggest that fast and frugal robust heuristics maynotbe a second-best option but rather “rational” responses in complex and changingmacroeconomic environments.(JELC63, D8, E32, E6, O4)