V1I3P5

Behavioral Economics and Decision Science in Corporate Strategies

Debidutta Acharya^1*

Abstract

In an era of rapid technological advancements and complex business environments, corporate decision-making is increasingly influenced by behavioral biases and artificial intelligence (AI)-driven decision science. This study explores how cognitive biases—such as overconfidence, anchoring, and loss aversion—affect strategic business decisions and how organizations can leverage AI and behavioral economics to mitigate irrational decision-making. Through a combination of qualitative analysis, case studies, and empirical data, the research highlights the impact of nudging techniques, predictive analytics, and AI-driven decision support systems in improving corporate performance. Case studies of companies like Google, Amazon, and Tesla demonstrate how behavioral insights enhance HR strategies, marketing, pricing models, and financial risk management. Findings suggest that businesses that integrate AI-driven behavioral insights experience higher efficiency, better risk assessment, and improved consumer engagement. However, challenges such as algorithmic biases, ethical concerns, and resistance to AI adoption remain significant barriers. The study recommends a hybrid decision-making approach that combines AI-driven analytics with human expertise to optimize corporate strategies. Future research should focus on emotional intelligence in leadership decisions, cross-cultural variations in behavioral biases, and ethical AI applications in decision-making. This research underscores the need for businesses to adopt data-driven, psychology-backed decision frameworks to enhance strategic outcomes. By integrating behavioral economics and AI-driven decision science, organizations can develop smarter, more ethical, and sustainable corporate strategies, ensuring a competitive advantage in the evolving business landscape.

Keywords:

Behavioral Economics; Decision Science; Cognitive Biases; AI in Decision-Making; Corporate Strategy; Risk Management