THE DUAL-EDGED SWORD: AI'S INFLUENCE ON CONSUMER BEHAVIOR AND CYBERCRIME IN DIGITAL INDIA

Abstract

Artificial Intelligence (AI) significantly influences consumer behavior by shaping decision-making processes and fostering irrational consumption patterns. This paper examines how AI interacts with various consumer behavior models, including the Nicosia model and the Theory of Buyer Behavior, to alter purchasing habits. AI's ability to personalize experiences and predict preferences enhances consumer engagement but also raises concerns regarding cognitive manipulation and privacy infringement. Children, in particular, are susceptible to AI-driven interactions, as they lack the capacity to assess the implications of automated responses. Similarly, AI-driven recommendations in financial services can lead to impulsive purchasing and increased expenditure. The banking sector serves as a prominent example of AI’s integration, where automated systems streamline transactions, enhance customer satisfaction, and drive revenue. However, such advancements also encourage excessive spending and dependency on AI-driven financial insights. Furthermore, the implementation of limited-memory AI in routine tasks, such as automated retail services and customer support, illustrates the shift from labor-intensive to capital-intensive industries, consequently impacting employment trends. While AI improves operational efficiency and consumer convenience, its broader implications necessitate careful consideration of ethical concerns, security risks, and economic consequences. The study highlights both the advantages and challenges posed by AI, emphasizing the need for regulatory oversight and strategic implementation to balance technological advancements with consumer well-being. AI's role in consumer decision-making underscores the necessity for responsible innovation, ensuring that automation enhances rather than exploits consumer behavior.

Keywords: Artificial Intelligence, Consumer Behavior, Irrational Behavior, Privacy, Banking