THE ROLE OF AI NUDGES IN OPTIMIZING CONSUMER BEHAVIOR IN FINANCIAL AND E-COMMERCE CONTEXTS

Abstract

Background: Digital nudging has gained prominence as a technique for influencing consumer behavior in e-commerce by subtly guiding user decisions through behavioral insights and interface design. However, the effectiveness of digital nudging can be inconsistent, affected by user demographics, behavioral deviations, and ethical considerations. Existing studies have struggled to quantify and measure these effects comprehensively.Methods Used: This study develops a novel objective function to optimize AI-driven digital nudging strategies, focusing on maximizing approval rates and transaction volumes while minimizing behavioral deviations. Various nudging techniques are evaluated through descriptive statistics, correlation analysis, and regression models. Additionally, time-series trends in transaction volumes are analyzed using ARIMA models, incorporating AI nudges as external regressors. Ethical implications of digital nudging are also explored to ensure fairness and transparency.Results Achieved: The optimization of AI nudging strategies led to significant improvements in both approval rates and transaction volumes. The analysis demonstrated varying effectiveness across different nudging techniques, with AI-driven approaches showing a substantial impact. Time-series forecasting revealed trends that correlate with the application of AI nudges, providing insights into their long-term effectiveness. Ethical considerations highlighted areas for improving transparency and reducing bias in nudging practices.Concluding Remarks: The study provides a comprehensive evaluation of digital nudging strategies, offering practical insights for businesses to enhance user engagement and decision-making in e-commerce. The developed objective function and analytical methods contribute to a better understanding of nudging effectiveness and ethical practices. Future research should focus on refining these strategies and exploring their application across different contexts and user segments.Keywords: Digital Nudging, E-Commerce, AI Optimization, Behavioral Analysis, Ethical Implications