Behavioral Economics in the Age of Automation and Artificial Intelligence

Abstract

The rapid evolution of automation and artificial intelligence (AI) has significantly reshaped economic structures and decision-making processes across industries. Behavioral economics, a field that integrates psychological insights into economic models, offers a unique perspective on understanding how individuals and organizations respond to these technological advancements. This study explores the intersection of behavioral economics, automation, and AI, examining how these factors influence economic behavior and decision-making in various sectors. The primary objective of this research is to analyze the impact of automation and AI on economic behavior through the lens of behavioral economics. It aims to uncover how cognitive biases, heuristics, and social influences affect the adoption of new technologies and their integration into economic systems. Additionally, this study seeks to identify potential challenges and opportunities that arise from the interaction between human behavior and AI-driven economic changes. This research employs a qualitative methodology using a literature review approach. By examining existing studies, theoretical frameworks, and empirical data, the study synthesizes key insights from behavioral economics and technological advancements. The review focuses on how automation and AI are reshaping consumer behavior, labor markets, and organizational decision-making, offering valuable implications for policymakers and business leaders.The findings reveal that automation and AI influence economic behavior in complex ways. Cognitive biases, such as overconfidence and loss aversion, shape how individuals and organizations engage with new technologies. Additionally, the integration of AI in decision-making processes leads to shifts in traditional economic models, creating new opportunities for efficiency while also introducing potential risks, particularly concerning employment and income distribution.