Behavioral Economics in Consumer Decision-Making: Insights from Experimental Studies

Abstract

Behavioral economics has significantly expanded our understanding of consumer decision-making by incorporating psychological factors and cognitive biases that challenge traditional economic models of rationality. This paper explores key experimental studies that demonstrate how consumers often deviate from rational decision-making due to biases such as anchoring, framing effects, and loss aversion. By analyzing controlled experiments in various consumer contexts, the paper highlights the real-world implications of behavioral insights for marketing strategies, public policy design, and financial decision-making. Additionally, the paper discusses the limitations of behavioral economics, including the challenges of replicating experimental findings in real-world settings, and suggests directions for future research. Understanding the impact of emotions, heuristics, and nudges on consumer behavior can lead to better policy interventions and business strategies aimed at improving consumer welfare.