Behavioural Economic Analysis of Generation Z Consumption Decision-Making in Social Media Environments

Abstract

The present paper employs the theoretical framework of behavioural economics to systematically analyze how social media platforms reconfigure the consumption decision-making patterns of Chinese Generation Z (born in 1997-2012) through three major cognitive biases, namely the anchoring effect, the herding effect, and the endowment effect, so as to transform their demographic scale advantage into manipulative 'cognitive surpluses'. Combining cross-country case studies and empirical data, the study finds that: (1) The anchoring effect significantly increases the impulse purchase rate by combining Gen Z's cognitive vulnerability, through the use of inflated reference prices and semantic framing, significantly increasing the impulse purchase rate. Secondly, the herd effect relies on algorithmic weighted communication models (e.g., TikTok heat x interaction rate ranking), using the information cascade mechanism and the social proof heuristic to drive irrational herd consumption; (3) the endowment effect is activated by the design of virtual ownership time-limited cart activating the reconstruction of mental accounts, when combined with the cognitive resource constraints under the multitasking scenarios of Generation Z increases the conversion rate of time-limited promotions. The paper proposes a threefold policy optimization path: the establishment of a dynamic price transparency framework to eliminate anchoring bias; the implementation of algorithmic accountability to break the positive feedback in the information cocoon; and the hedging of the virtual endowment effect through the 'cooling-off period' mandatory mechanism and opportunity cost explicitness.