Application and Development of Behavioural Economics in Consumer Decision Making

Abstract

 Behavioural economics, as an interdisciplinary field integrating psychology and economics, offers new perspectives for understanding consumer decision-making. This paper provides an overview of the core theories of behavioural economics, its applications in consumer decision making, and its developments and challenges in market practice and policy making. First, behavioural economics challenges traditional economic assumptions about rational decision-making by revealing core concepts such as limited rationality, prospect theory and behavioural biases, providing a deeper understanding of consumer behaviour. Second, the paper explores the effectiveness of behavioural economics in practical applications, such as improving firms' market performance and policy implementation by optimising marketing strategies, utilising personalised recommendations and developing behavioural intervention policies. However, behavioural economics still faces challenges in terms of theoretical universality, cross-cultural applicability and dynamic adaptation. Future research directions include theoretical integration, cross-cultural validation, adaptation to technological developments, optimisation of policy practices and intersection studies with psychology. The review in this paper aims to provide reference for academic research and practical application, to promote the further development of behavioural economics, and to provide theoretical support for policy making and market strategies.