AI, Behavioural Science, and Consumer Welfare

Abstract

AbstractThis article discusses the opportunities and costs of AI in behavioural science, with particular reference to consumer welfare. We argue that because of pattern detection capabilities, modern AI will be able to identify (1) new biases in consumer behaviour and (2) known biases in novel situations in which consumers find themselves. AI will also allow behavioural interventions to be personalised and contextualised and thus produce significant benefits for consumers. Finally, AI can help behavioural scientists to “see the system,” by enabling the creation of more complex and dynamic models of consumer behaviour. While these opportunities will significantly advance behavioural science and offer great promise to improve consumer outcomes, we highlight several costs of using AI. We focus on some important environmental, social, and economic costs that are relevant to behavioural science and its application. For consumers, some of those costs involve privacy; others involve manipulation of choices.