Rationalized the default configuration file path and updated documentation

internal/config/config_test.go

@@ -132,6 +132,53 @@ func TestLoadConfigEmptyFileResolvesToBuiltInDefaults(t *testing.T) {
 	}
 }
 
+func TestLoadConfigImplicitSearchPrefersUsrLocalEtcOverEtc(t *testing.T) {
+	tmp := t.TempDir()
+	localPath := filepath.Join(tmp, "usr-local.yml")
+	etcPath := filepath.Join(tmp, "etc.yml")
+
+	if err := os.WriteFile(localPath, []byte("prompt_dir: ./from-usr-local\n"), 0o644); err != nil {
+		t.Fatal(err)
+	}
+	if err := os.WriteFile(etcPath, []byte("prompt_dir: ./from-etc\n"), 0o644); err != nil {
+		t.Fatal(err)
+	}
+
+	orig := defaultConfigSearchPaths
+	defaultConfigSearchPaths = []string{localPath, etcPath}
+	t.Cleanup(func() { defaultConfigSearchPaths = orig })
+
+	got, err := LoadConfig("", false)
+	if err != nil {
+		t.Fatalf("expected no error, got %v", err)
+	}
+	if got.PromptDir != filepath.Clean("./from-usr-local") {
+		t.Fatalf("expected usr-local config to win, got prompt_dir=%q", got.PromptDir)
+	}
+}
+
+func TestLoadConfigImplicitSearchFallsBackToEtcWhenUsrLocalMissing(t *testing.T) {
+	tmp := t.TempDir()
+	missingLocal := filepath.Join(tmp, "missing-local.yml")
+	etcPath := filepath.Join(tmp, "etc.yml")
+
+	if err := os.WriteFile(etcPath, []byte("prompt_dir: ./from-etc\n"), 0o644); err != nil {
+		t.Fatal(err)
+	}
+
+	orig := defaultConfigSearchPaths
+	defaultConfigSearchPaths = []string{missingLocal, etcPath}
+	t.Cleanup(func() { defaultConfigSearchPaths = orig })
+
+	got, err := LoadConfig("", false)
+	if err != nil {
+		t.Fatalf("expected no error, got %v", err)
+	}
+	if got.PromptDir != filepath.Clean("./from-etc") {
+		t.Fatalf("expected etc fallback config, got prompt_dir=%q", got.PromptDir)
+	}
+}
+
 func TestApplyCLIOverridesAppliesPrecedence(t *testing.T) {
 	base := AppSettings{
 		PromptDir:           "/from/config/prompts",