Book Title: Innovative Approaches in Multidisciplinary Research and Development (IAMRD)
Chief Editors: Dr. Anil Kashinath Salunke and Dr. Rituraj Pant
Associate Editors: Prof. (Dr.) Sourav Madhur Dey and Dr. Amrutha Satheesan
Co-Editors: Dr. Souvik Sur and Dr. Phakir Singh
ISBN: 978-93-7183-004-1
Chapter: 24
DOI: https://doi.org/10.59646/708/24
Authors: Dr. Sanjay Prasad, and Dr. Deepali amb Prasad
Abstract
Artificial Intelligence (AI) has rapidly become a part of economic and social systems, leaving a lasting impact on how people make decisions, which is contrary to the traditional notion of rational behaviour in classical economics. This research paper explores the connection between behavioural economics and AI-influenced worlds, with a particular emphasis on the impact of cognitive biases, emotional dynamics, algorithmic suggestions and digital nudges on non-rational human decisions. The study will also utilize a mixed-method approach, incorporating quantitative data analysis of consumer behaviour data alongside qualitative data collected from surveys, interviews, and case studies on the use of AI-driven platforms like digital finance apps, e-commerce platforms, social media platforms and recommendation engines. The results show that AI systems are more and more affecting the choices of the people, taking advantage of the behavioural patterns, which can further amplify the tendencies to confirmation bias, anchoring, herd behaviour, and overconfidence. AI technologies increase the efficiency, personalization and predictive power, but they also raise concerns about manipulation, decreased autonomy, lack of information or transparency of ethics. The study also uncovers some interesting anecdotes about how consumers often don’t agree with algorithmic suggestions even when they do the rational thing to do, showcasing how much users have come to depend on intelligent systems. Moreover, demographic and socio-economic factors impact the levels of trust and reaction to AI-based choices. The paper highlights the changing landscape of behavioural economics as a way to grasp the behaviour of consumers in the digital era, financial decision-making and policy design. It highlights the importance of ethical AI governance, transparency in algorithmic processes, digital literacy programs, and policies for consumer protection in order to foster equitable and responsible AI usage for decision making. In addition, the study suggests strategic guidelines for businesses, policymakers, and technology developers on the design of AI systems that will aid in making informed decisions and reduce behavioural exploitation. The research is a study of AI and behavioural economics, a field that is becoming more important in recent years and is still in its infancy. The study shows that today’s rational decision making is not solely about rationality but also a product of technology, psychology, and economic considerations.
Keywords: Behavioural Economics, Artificial Intelligence, Decision-Making, Cognitive Biases, Algorithmic Influence, Digital Nudging, Consumer Behaviour, AI Ethics, Rationality, Human-AI Interaction.