Abstract:

Economics is one of the social sciences where mathematics is extensively used. The heavy reliance on mathematics in the social sciences, however, has been criticized by contemporary economists. While the explanatory power of economic theories increases through mathematics, the ability of economics, a social science, to explain real human behaviors diminishes. Therefore, economics should utilize mathematics as a tool, not a purpose. Furthermore, economics must draw from disciplines such as psychology, sociology, and philosophy to explain human behaviors in a more realistic manner. Based on this state of economics, the prevailing notion today is that individuals may not be as rational as mainstream economics assumes, and they may possess limited willpower and computational abilities. The fundamental assumptions in mainstream economic thought are considered unrealistic, and, to make them more realistic, the field of behavioral economics, which combines psychology and economics, has emerged. In this study, the historical development of behavioral economics is explored. Within this scope, the study begins with the relationship between economics, psychology, and mathematics. It provides a historical analysis of first-generation and second-generation behavioral economics.

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