Behavioural Economics in Business Strategy: A Critical Narrative Review of Pricing, Marketing and Finance

Behavioural economics has moved from a critique of strict rational-choice assumptions to a practical influence on pricing, marketing, financial-product design and managerial decision processes. Yet its strategic use is often fragmented: pricing studies emphasise reference dependence and fairness, marketing studies focus on framing and choice architecture, and finance research separates investor, household and managerial biases. This critical narrative review integrates these literatures to assess when behavioural mechanisms create durable strategic value and when they generate weak, context-specific or ethically problematic effects. Literature published from 1 January 2000 to 4 July 2026 was examined, with earlier seminal studies retained where necessary to establish foundational mechanisms. Evidence was synthesised around reference dependence, constructed preferences, mental accounting, social influence, inertia, overconfidence and bounded attention, and then evaluated across pricing, marketing and finance. The evidence is strongest where mechanisms are tied to a clearly defined decision environment and tested against behavioural or economic outcomes in field settings. Behavioural pricing can alter willingness to pay, product choice and profit, but fairness, transparency and learning materially constrain personalised and dynamic pricing. Marketing choice architecture can improve conversion or engagement, but average effects conceal substantial heterogeneity and are vulnerable to publication bias, habituation and manipulative implementation. In finance, defaults and commitment structures have comparatively strong practical support, whereas causal interpretation of investor and executive biases is more difficult because behavioural proxies, selection and endogenous market responses complicate identification. Across domains, the strategic value of behavioural economics depends less on applying a named bias than on diagnosing the decision process, testing interventions causally, measuring persistence and heterogeneity, and governing effects on trust and welfare. A strategy-level framework is proposed in which behavioural interventions are treated as testable components of decision architecture rather than universal shortcuts to influence.