Exploring The Role of Behavioural Economics Influencing Consumer Decision Making in an Era of Artificial Intelligence

Abstract

This paper explores the role of artificial intelligence and behavioural economics in influencing consumer decision making, and determining psychological techniques utilized by AI through tools like chatbots and virtual assistants which help impact consumer choices. It focuses on how Generation Z is impacted by AI personalization which causes regret aversion, and leads to impulsive buying behaviour. A two phase multi-method design used. A PRISMA-based systematic literature review across ABDC, Web of Science, Scopus and IEEE Xplore-indexed sources in phase 1 to explore how buying intentions are influenced by AI tools. Phase two uses an embedded case study procedure which is used in a qualitative multiple case study design, the cases about AI tools used for retail, influencer marketing were intentionally used. Data triangulation took place through customers’ opinions and peer reviewed articles. Customers tend to trust human influencers more because it provides them with social proof. But this gap is decreasing because of AI strengthening its relevance. However consumers worry about algorithmic biases and privacy concerns leading to a decrease in trust and this has an effect on their long term purchasing behaviour. The paper proposes a framework that combines technology adoption models to behavioural economics, providing a theoretical foundation for ethical AI regulation in marketing 5.0. Platform developers, marketers can use a framework that balances customization and ethicality.