Cognitive Biases of Consumers as Barriers in Transition towards Circular Economy

Purpose: The purpose of this paper is to identify the cognitive biases of consumer and explain how they are creating barriers in transition towards circular economy. Methodology: This is a conceptual paper which adopts a consumer centric conceptualization of circular economy by focusing on cognitive biases as an underlying and unifying mechanism which is creating barriers in adoption of circular economy. This conceptualization explains consumers’ non –adoption of circular business model, highlight synergies across disconnected theories and streams of research originating in different disciplines and at the individual, societal and cultural levels of analysis. Findings: The findings of this paper suggest that circular business models are not fulfilling the psychological, social and cultural needs of the consumers and that in turn lead to barriers in diffusion of the circular economy. Consumers have negative connotation with the different circular business model due to their cognitive biases. Practical implications: The paper details about key implications to design effective interventions to modify consumer behavior in the desired direction for hassle-free transition to circular economy from the linear economy. Originality: This paper offers a shift in CE research from a deterministic approach to conceptualizing consumers to a positivist approach to conceptualizing consumers.