Redefining Consumer Decision-Making: The Neuropsychological Foundation of Behavioral Economics in Modern Marketing

Abstract

In today’s dynamic marketing landscape, behavioral economics (BE) plays a pivotal role in shaping consumer decision-making, offering deeper insights into the irrational and bias- driven nature of consumer behavior. This paper explores how BE challenges traditional rationality, emphasizing cognitive biases and irrational decision-making. It examines key BE principles such as prospect theory, loss aversion, and nudging, with a focus on the neuroscience underlying decision-making; in particular, brain regions including the prefrontal cortex and amygdala, as well as neurotransmitters that influence the decision to purchase. The research demonstrates how BE provides companies with a more precise understanding of consumer behavior than CB theories. Finally, it shows how business organizations can utilize BE insights to improve marketing strategies, increase consumer engagement, and better influence consumer decisions.