  We study a large economy in which firms cannot compute exact solutions to the
non-linear equations that characterize the equilibrium price at which they can
sell future output. Instead, firms use polynomial expansions to approximate
prices. The precision with which they can compute prices is endogenous and
depends on the overall level of supply. At the same time, firms' individual
supplies, and thus aggregate supply, depend on the precision with which they
approximate prices. This interrelation between supply and price forecast
induces multiple equilibria, with inefficiently low output, in economies that
otherwise have a unique, efficient equilibrium. Moreover, exogenous parameter
changes, which would increase output were there no computational frictions, can
diminish agents' ability to approximate future prices, and reduce output. Our
model therefore accommodates the intuition that interventions, such as
unprecedented quantitative easing, can put agents into "uncharted territory".
