Field studies of networks have uncovered a preference to befriend people we perceive as similar according to some dimensions of our identity ('homophily'). Lab studies of network formation games have found that adherence to social norms of reciprocity and inequity aversion are also drivers of...

We introduce Behavioral Learning Equilibria (BLE) into a multivariate linear framework and apply it to New Keynesian DSGE models. In a BLE, boundedly rational agents use simple, but optimal AR(1) forecasting rules whose parameters are consistent with the observed sample mean and autocorrelation...