Explain the transition to 'institutional economics' from 'neoclassical economics'.

The transition from neoclassical economics to institutional economics represents a shift in how economists approach the analysis of economic systems, particularly in terms of understanding the role of institutions and their influence on economic outcomes. This shift has implications for the economics of the social sector and the environment, where the role of non-market forces, societal norms, and governmental structures is more pronounced.

Neoclassical economics, dominant from the late 19th century through much of the 20th century, focuses primarily on the role of individual actors and their decision-making processes. It is based on assumptions such as rationality, utility maximization, and perfect competition. Central to neoclassical economics is the belief that markets are self-correcting, and that individuals, firms, and governments behave in ways that lead to efficient outcomes. Under this framework, economic phenomena such as income distribution, market outcomes, and resource allocation are analyzed through the lens of supply and demand, assuming minimal intervention from external institutions.

However, over time, critics of neoclassical economics highlighted its limitations in explaining real-world economic dynamics. The neoclassical model oversimplifies human behavior by assuming individuals have perfect information and act solely out of self-interest, without accounting for the complexity of institutional contexts. In _________ ________ _______ _____ ______ _____ _______ __________ ______ ___.
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