Oxford Research Encyclopedia of Economics and Finance, forthcoming
Financial Decision Making, at the Dawn of AI
Abstract. This article gives perspective on the academic literature on personal financial decision making. I explore three main domains of financial choices: savings versus consumption, investment decision making, and choices around debt. In each domain, people behave in ways that deviate from normative prescriptions of financial economics. I explore the main drivers of financial decisions that result in these deviations. The article concludes with a forward-looking perspective of how generative artificial intelligence (GenAI) might reshape the landscape of individual’s financial decisions.
Keywords: household finance, personal financial decision making, generative AI, saving and consumption, investment mistakes, debt choices, behavioral finance survey.
In brief
A review of research on how people make personal financial decisions, and of how generative AI might change them.
A review of research on how people make personal financial decisions — saving versus spending, investing, and borrowing — and why their choices often depart from what financial economics prescribes. The article surveys the main drivers of those departures in each domain. It closes with a forward-looking discussion of how generative AI might reshape the way individuals make financial decisions.
Read and cite
- Working paper version, SSRN
Heimer, Rawley Z.. Forthcoming. “Financial Decision Making, at the Dawn of AI.” Oxford Research Encyclopedia of Economics and Finance. Oxford University Press.
@incollection{heimer2026ai,
author = {Heimer, Rawley Z.},
title = {Financial Decision Making, at the Dawn of {AI}},
booktitle = {Oxford Research Encyclopedia of Economics and Finance},
publisher = {Oxford University Press},
year = {Forthcoming},
url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6249619}
}
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