Algorithmic Transparency and Immersive Retail: Investigating the Joint Effects of Explainable AI and Augmented Reality on Consumer Trust and Purchase Decisions

The convergence of artificial intelligence (AI) and augmented reality (AR) is reshaping digital retail, yet how algorithmic transparency, explainable AI, and AR-based immersion jointly shape consumer responses remains theoretically underdeveloped. Drawing on the Stimulus–Organism–Response (S–O–R) model, this study examines the influence of cognitive stimuli (algorithmic transparency and explainable AI) and experiential cues (AR immersion) on trust, perceived usefulness, immersion, purchase decisions, and continued usage intention. Using survey data from 420 online shoppers in the West Bank, Palestine, and analyzed via structural equation modeling, the findings indicate that cognitive evaluations—particularly perceived usefulness and trust—exert stronger effects on purchase decisions than immersion. Specifically, algorithmic transparency enhances trust, while explainable AI strengthens perceived usefulness; AR immersion contributes to engagement, but its behavioral effects remain comparatively weaker. The results suggest that experiential engagement serves as a complementary enhancer, operating most effectively when supported by transparent and useful AI systems. The study extends AI–AR commerce literature by proposing a multi-stage S–O–R framework and demonstrating the conditional role of immersion in emerging digital markets.