# Professor Xavier Gabaix's new research on interest rates is featured

1 Faculty News July 28, 2016 ![Bloomberg View logo](/sites/default/files/styles/246w/public/assets/images/bloombergview_0.jpg?itok=47DlvcFA)>

Excerpt from [Bloomberg View](http://www.bloomberg.com/view/articles/2016-07-28/answering-the-hardest-question-in-economics) -- "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](http://www.stern.nyu.edu/faculty/bio/xavier-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."

[Read more](http://www.bloomberg.com/view/articles/2016-07-28/answering-the-hardest-question-in-economics)