The Impact of Anchoring Effects, Loss Aversion, and Belief Perseverance on Consumer Decision-Making

Abstract

In today's intricate consumer environment, consumer decisions are influenced by various cognitive biases, including Anchoring Effect, Loss Aversion, and Belief Perseverance. These cognitive biases can lead to irrational consumer decision-making with extensive and far-reaching implications for individuals and the market. This study employs a comprehensive literature review approach and analyzes multiple real-world cases and studies to illustrate the impact of these cognitive biases in different domains. The findings of this study reveal that the anchoring effect influences consumers through price and information anchors. Loss aversion makes them more cautious and risk-averse, while belief perseverance leads them to cling to their pre-existing beliefs, even in the face of contradictory evidence. These cognitive biases significantly affect political, investment, and consumption decisions, potentially resulting in irrational choices and resource allocation. This study underscores the influence of cognitive biases in consumer decision-making and proposes strategies to challenge and ameliorate these biases. Such insights hold practical significance for consumers, policymakers, and marketing professionals, contributing to enhancing decision quality, mitigating the risks of irrational behavior, and improving economic well-being.