We show how the “wilderness of non-rationality" posed for the policymaker may

be negotiated by designing a robust Taylor-type monetary rule across a RE NK

model and competing behavioural alternatives. The latter consist of a model with

“Euler learning" and a bounded rational one with myopia due to Gabaix (2020). For

the former expectations of endogenous variables take the form of a general heuristic

rule, encompassing simple adaptive expectations, that is supported by an experiment

study. This gives four competing NK models, the benchmark one with rational

expectations (model RE), Euler learning with a simple adaptive expectations heuristic

rule (model EL-SAE), Euler learning with the general rule (model EL-GAE) and

the Gabaix bounded rational model (model BR). In our novel forward-looking

approach, policymakers weight models based on relative forecasting performance

rather than Bayesian model averaging.