Departures from rationality are interesting -- in fact, the Krussel and Smith paper and the related line of research does depart from rationality, even though i

Departures from rationality are interesting -- in fact, the Krussel and Smith paper and the related line of research does depart from rationality, even though in this case this is done for computational reasons. The question is, how much, and what kind, of irrationality is reasonable to admit into a model? While rationality is easy to define, there can be an infinite number of ways people can be irrational, and their decision processes would change. Macroeconomics used to assume less-than-rational, empirically calibrated decision processes and aggregate behavior that would rise from those; but these models did not adequately account for people changing their behavior, including the degree of irrationality, in response to changes in the environment.