BEHAVIORAL ECONOMICS AND CONSUMER FINANCIAL DECISION-MAKING:  AN INDIAN PERSPECTIVE

AUTHOR – PALAK, SIMRAN JAISWAL & AYUSH SHUKLA, STUDENTS AT SCHOOL OF LAW, CHRIST UNIVERSITY, LAVASA CAMPUS, PUNE

BEST CITATION – PALAK, SIMRAN JAISWAL & AYUSH SHUKLA, BEHAVIORAL ECONOMICS AND CONSUMER FINANCIAL DECISION-MAKING:  AN INDIAN PERSPECTIVE, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 4 (4) OF 2024, PG. 709-715, APIS – 3920 – 0001 & ISSN – 2583-2344.

Abstract

The subject that is being discussed focuses on psychology and economics-the ways in which cognitive biases, heuristics, and social influences create consumer decision-making-particularly within financial matters. This paper would address how such principles might find expressions in the Indian consumer behavior-world-a cultural, socio-economic, and regulatory profile that is unique. The word refers to behavioral economics that points to the crossing area between psychology and economics. A rich characteristic of rich characteristics, particularly when cognitive biases and emotional impacts and also a range of sociocultural factors apart from the normative economic rationality are considered, emerge in this regard-once focused on the financial decision-making process of consumers. This paper shall discuss the possibility of applying behavioral economics in India, an economy having diverse socioeconomic conditions and rapidly developing technologies. Important ideas, such as bounded rationality, prospect theory, and heuristics, affect Indian consumer saving, spending, and investment behaviors and are evaluated in conjunction with such cognitive biases as anchoring, overconfidence, and hyperbolic discounting. Finally, sociocultural influences on financial decisions include caste-based financial networks and gender-inequality-based family norms, which often lead to suboptimal outcomes. This paper analyzes the impact of programs under digital financial inclusion-cases such as PMJDY and UPI-on how nudges may promote adoption while improving access to finance. While such tactics are promising, it raises concerns with regional variances and structural inequalities that call for long-term, context-specific solutions toward financial literacy, inclusion, and economic empowerment that would make India better placed financially secure and equitable; this study underlines the fact that structural reforms need to be integrated with behavioral insights for a more effective recommendation.