Decision bias: Consumer behaviour influenced by bias

Abstract

This essay will explain the impact of decision bias on everyday consumer behaviour. Firstly, the meaning of decision bias will be explained and then examples of the behavioural processes by which consumer behaviour is affected by it will be presented. Next, the processes by which consumer behaviour is affected will be specifically analysed by introducing four types of bias, confirmation bias, valuation bias, loss aversion, and overconfidence. Finally, the complexity and importance of the study of decision bias in practical decision making is further discussed using the example of consumers buying and firms selling financial products. This article will be used to illustrate how businesses use the impact of biases on consumers to gain additional benefits by gaining a deeper understanding of their target audience, and how consumers can identify and avoid falling into decision-making traps once they are aware of these biases. Businesses and consumers make better economic decisions that lead to more beneficial and sustainable economic interactions.