Vedic Science International Multidisciplinary Peer-reviewed Journal 

Article  Information

Journal: Vedic Science
Volume: 28 | Issue: 2 | Year: 2026
Pages: 165–167
DOI:  https://doi.org/10.66718/vsj.v28.i2.12    
Received: 15 April. 2026
Accepted:  23 June, 2026
Published: 30 June, 2026

Behavioural Biases and Rational Choice Theory: An Integrative Analysis of Economic Decision-Making

Jaya, North East Christian University

Dr. Hari Dutt, North East Christian University

Abstract

Economic decision-making has traditionally been explained through Rational Choice Theory (RCT), which assumes that individuals are rational agents maximizing utility based on stable preferences and complete information. However, empirical evidence from psychology and behavioral economics challenges these assumptions, showing that decisions are influenced by cognitive biases, heuristics, emotions, and social contexts. This paper conceptually analyzes the contrast between Rational Choice Theory and behavioral approaches. It traces the historical development of RCT, outlines its assumptions, and examines its strengths and limitations. It then explores behavioral economics, focusing on biases such as loss aversion, anchoring, overconfidence, framing effects, and present bias. By comparing normative and descriptive dimensions, the study highlights how behavioral models provide a more realistic account of decision-making while raising theoretical and policy questions. The paper concludes by advocating for an integrative perspective that reconciles rational choice principles with behavioral insights.

Keywords

Rational Choice Theory, Behavioral Economics, Cognitive Biases, Decision-Making, Heuristics

References

Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263–291.

Simon, H. A. (1957). Models of man: Social and rational. Wiley.

Thaler, R. H. (2015). Misbehaving: The making of behavioral economics.

W.W. Norton. Sen, A. (1977). Rational fools: A critique of the behavioral foundations of economic theory. Philosophy & Public Affairs, 6(4), 317–344.

How to cite this article

Jaya, Sharma, H.D.  (2026). Behavioural Biases and Rational Choice Theory: An Integrative Analysis of Economic Decision-Making. Vedic Science, 2026 (2), 165–167. ISSN: 0975-0312. DOI: https://doi.org/10.66718/vsj.v28.i2.12