From Rationality to Reality: An Integration of Psychology and Economics

Abstract The current research explores the conceptual milestones and interdisciplinary growth of behavioural economics. It examines the transformation of behavioural economics into a cornerstone of modern economic thought. The review is structured around the conceptual shift. It examines the evolution of the concept of behavioural economics. It traces the early integration of economic thought with psychological insights to its development as a distinctive interdisciplinary domain. It further evaluates the principles of behavioural economics and investigates how they form the foundation for the decision-making process. It discusses the process behind irrational human behaviour. This evaluation offers deep and valuable insights for understanding human behaviour. The gaps have been identified, and potential trends have been recognized for future scope of work in behavioural economics. The study is the original structured synthesis that offers historical evolution, conceptual developments, research gaps and future research directions.