Effect of Externalities like Choice Overload, Nudges and Unconscious Bias on Consumer Choice and Their Convergence in Student Groups

Consumer choice and decision making are often influenced by various covert and inadvertent factors in day-to-day lives, also known as externalities. Prior studies and economists have always stressed and based their models on the ‘assumption’ that consumers are perpetually rational in their decision making and are adept at pursuing the source of their satisfaction. But real-life observations paint a contradictory picture. They have an irrational compulsion to keep options open and have as many goods in their basket as possible, as long as it is on or under their budget curve. While measuring their options and calculating their potential opportunity costs, an average consumer oversees the most important opportunity cost them time. By considering their time they spend taking a decision as constant or irrelevant, they fail to take into account the consequences of not deciding and end up being miserable. This study aims to trace the effect of externalities like choice overload, nudges and unconscious bias on consumer choice among Indians students. Further, a relationship has been established between the three externalities after performing PCA after including certain demographic factors. Our findings indicate that the choice paradox in terms of Choice overload, Nudges and Unconscious bias is very much dependent upon the demographic factors of the individuals such as education, gender and number of family members and economic factors such as the household’s income. Further, these dependencies are not uniform. We found that if the individual is a student, then all three types of choice paradox are present.