Behavioral Economics and Consumer Choice: Understanding Decision-Making Processes

Abstract

Consumers make a lot of decisions in daily lives like food, health, and finance. Consumers are usually obsessed with instant gratification and they are likely to go with quick, yet smaller, reward. In the same way, delaying the satisfaction, or going for delayed reward, can be helpful. This study is aimed to understand how to encourage consumers to resist instant gratification and prefer long-term gratification for healthy and sustainable benefits. This study gets an insight to recent advancements from neuroimaging and behavioral studies which are relevant to know customer decisions. This study is descriptive in nature and adopts both qualitative and quantitative approaches. It presents findings from online survey to understand whether behavioral economics affects consumers’ decision-making processes with tailored communication.

At the end, this study highlights the importance of behavioral economics when it comes to explain the process of decision-making. For proper knowledge of mechanisms and attitudes of decision-making, there is a need to consider psychological and subjective “behavioral economics” aspects and understand rational behavior from traditional aspects in neoclassical and classical studies. This decision-making approach affects the process of economic development. Researchers can have better understanding of economic issues and find ideal solutions by considering all factors of consumers’ decision-making.