Behavioral economics has become an important theory for explaining consumer choices inside digital settings in an increasingly digital world. Conventional economic models, which presume reasonable actors making utility-maximizing decisions, fall short of fully appreciating the complexities of real-world behavior shaped by cognitive biases, emotional triggers, and environmental influences. A fundamental idea presented by Thaler and Sunstein, nudging is about minor changes in choice architecture that guide behavior without limiting choice freedom. Nudges appear in digital environments in interface design features like defaults, social proof, reminders, framing, and gamification all intended to use human heuristics. Ranging from e-commerce to fintech, health apps, and public services, digital platforms utilize nudges to affect activities like saving, purchasing, exercising, and civic involvement. Highlighting its possibilities and ethical complexities, this study combines theoretical insights on digital nudging with empirical evidence. Research show that targeting System 1 thinking fast, intuitive, and driven by heuristics is most successful especially in situations where consumers show little attention or cognitive engagement. Though raising questions about manipulation, transparency, and autonomy, the adaptability of digital nudges made possible by artificial intelligence and real-time behavioral tracking also improves their effectiveness. Dark patterns covert or coercive design techniques present ethical hazards even though nudges encourage prosocial behaviors including health enhancement and energy conservation. Regulatory and design frameworks are needed to ensure that nudging matches user welfare and democratic values. The review also assesses methodological approaches in nudge research, including randomized controlled trials, A/B testing, and qualitative studies. Challenges persist in measuring long-term effects, ensuring transparency, and generalizing findings across cultures. As digital environments evolve, the fusion of nudging with AI, personalized interfaces, and dynamic feedback systems presents both opportunities and ethical dilemmas. Responsible implementation, guided by ethical principles and user-centric design, is essential for leveraging digital nudges as tools for beneficial behavioral change in the digital age.