Rational thinking under costly information-Macroeconomic implications

► We study the dynamics of a simple macroeconomic model under optimized rationality. ► Optimized rational behavior implies weighting costs of information acquisition. ► Agents may find it optimal to purchase an imperfect signal on true future values. ► The selection of an optimal degree of rationality deviates the economy from the perfect foresight outcome. ► The rationality assumption eventually generates long-term endogenous fluctuations, that otherwise are absent.