Beyond the Black Box: An Analytical Study of AI-Generated Content's Impact on Consumer Engagement and Ethical Co-Creation Issues in Maharashtra, India

This study analytically investigates the impact of AI-Generated Content (AIGC) on consumer engagement and the ethical challenges arising from the human-AI co-creation process within the specific context of Maharashtra, India. Ever since marketers started to deploy AI-Generated Content (AIGC) on a large scale, some have kept raising the issues of consumer trust, perceived authenticity and moral responsibility, because generative algorithms still operate in a mysterious, "black-box" way. It has been suggested that Explainable Artificial Intelligence (XAI) can serve as a tool to address such concerns through the transparency and understandability of AI-generated outputs. Whether consumers in emerging, digitally evolving markets really appreciate such transparency cues or whether the advantages of AIGC in terms of efficiency and personalization are so great that they make explainability unnecessary, empirical evidence is still scarce. This paper deals with this issue headon by experimentally comparing consumer reactions to disclosed and undisclosed AIGC in the Indian regional context. Taking the state as a major digital commerce hub with somewhat complicated multilingual dynamics (Marathi–Hindi–English), this research is not limited to global studies only, but it goes further to fill the critical gap in understanding regional consumer response to algorithmic marketing. The core theoretical mechanism tested is the Explainable Co-Creation (ECC) Model that suggests Perceived Authenticity (PA) is a mediator between AI Content Transparency (ACT) and ultimate Engagement (CE) whereas Consumer Trust (CT) and Ethical Awareness (EA) are two key moderators. A cross-sectional survey with mixed-methods, stimuli-based, component involving urban consumers in Mumbai, Pune, Nashik, and Nagpur was deployed to carry out this research work. The study tested six foundational hypotheses using PLS-SEM. The preliminary results are anticipated to reveal an important Paradox of Transparency in which a high level of Ethical Awareness could negatively moderate the acceptance of disclosed AIGC. This implies that for a digitally conscious Indian consumer, transparency by itself may not be enough to regain authenticity. The study provides important managerial implications for the creation of a culturally-sensitive, hybrid AI-human content strategy and it also supports the requirement of policy interventions like the introduction of mandatory AI content labeling to facilitate consumer autonomy in the emerging digital markets. This research makes a significant move by extending consumer engagement theory to the non-sentient co-creation domain and by providing a regional AI ethics lens for the future research.