AI As a Choice Architect: Ethical Implications of Algorithmic Nudging in Online Retail

Nudge Theory, introduced by Thaler and Sunstein in their seminal book, inspired the creation of human choice architects who applied behavioural insights into influence decisions across various domains. In the online retail industry, however, the evolution of Artificial Intelligence, predictive analytics, and real time data personalization has transformed traditional nudging into algorithmic choice architecture powered by data-driven insights. This paper conceptually examines how AI driven Algorithmic nudges operate through cross- platform behavioural tracking, recommender systems, push notifications, and default designs to influence consumer decisions. The epistemological orientation of this paper is grounded in qualitative and interpretative approach based on critical realism to explore how consumers conform to stacked and multichannel nudges (multiple, sequential interventions across apps, websites and social platforms) that leverage cognitive biases and bounded rationality. Findings suggest that AI enabled nudges outperform human- designed ones in precision, scalability, and contextual adaptability, allowing retailers to subtly guide consumer behaviour under the guise of personalisation. However, the opacity of these algorithmic mechanisms raises serious ethical questions regarding informed consent, privacy, and autonomy, especially for vulnerable consumer groups. The study underscores the need for transparent AI governance, ethical design principles, and regulatory frameworks to prevent behavioural manipulation in digital marketplaces. It further argues that the evolution from libertarian paternalism to algorithmic paternalism represents a critical shift that challenges the foundational ethics of Nudge Theory and calls for cross-disciplinary collaboration between marketing, technology, human- computer interaction and law to ensure responsible AI-driven persuasion in online retail.