Beyond the algorithm: How artificial intelligence-driven consumer insights shape young consumers' purchasing behavior in the age of privacy paradox

Abstract

This study examines the impact of artificial intelligence (AI)-driven consumer insights on the purchasing behavior of young consumers, with a focus on the mediating role of perceived personalization and the moderating effect of privacy concerns. Grounded in the Technology Acceptance Model and privacy calculus theory, the study adopts a quantitative research design. Survey data were collected from 376 consumers in the Middle East, and the hypotheses were tested using structural equation modeling. The findings reveal that AI-driven consumer insights significantly enhance purchasing behavior through perceived personalization. However, high levels of privacy concern diminish this effect, indicating a conditional relationship. The research highlights the dual role of personalization and privacy in shaping consumer responses to AI-driven marketing, offering new theoretical insights into digital consumer behavior. Marketers and AI developers should strike a balance between personalization efforts and transparent privacy practices to maintain consumer trust and engagement in AI-powered environments.