Experience Stern | Faculty & Research

Excerpt from Bloomberg View -- "Instead of assuming that people are perfectly rational, he theorizes that they have limited attention -- what psychologist Herbert Simon called 'bounded rationality.' When interest rates or gross domestic product change, people in Gabaix’s model don't quite realize that things are different. Even more importantly, they’re short-sighted -- they don’t think as much about the probability of a recession happening 10 years from now as they do about one occurring in the next six months."

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