The Decoy Effect: A Hidden Force Behind Our Choices

Picture of Omer Lewinsohn

Omer Lewinsohn

Some suggest we make an astonishing 35,000 decisions each day—ranging from small, unconscious choices like what to wear, to bigger ones like which product to buy or service to choose. While I have my doubts about that number (you can read more about it here), it’s clear that decision-making is a huge part of our daily lives. But have you ever noticed that sometimes, one option just seems to “make more sense” after all the choices are laid out? That could be thanks to a fascinating psychological phenomenon known as the decoy effect.

It’s not just a tool used by marketers; the decoy effect is everywhere—from politics to dating apps. In this blog, we’ll break down how it works, why it’s so powerful, and how it can be used in different areas of life. But let’s not forget: people are smart. When used too blatantly, the decoy effect can have the opposite of its intended impact, turning savvy consumers off.

What is the Decoy Effect?

Ever wonder why a particular choice just feels like the “right” one when you’re faced with a few options? That’s not always by accident. The decoy effect is a subtle psychological trick that marketers, businesses, and even politicians use to guide your decision-making without you even realizing it. It’s a bit like having an invisible hand gently push you toward one option—making it seem like the smartest, most logical choice.

To explain it simply: a decoy is a less attractive choice that exists to steer you toward the target option. This works because humans are wired to make comparisons, and the decoy skews that comparison in favor of the target.

For example, let’s say you’re buying headphones:

  • Option A: A $50 pair with standard features.
  • Option B: A $100 pair with noise cancellation and premium sound.

Without the decoy, you might lean towards Option A if you’re budget-conscious, or Option B if you want high quality. But now, a third option is introduced:

  • Option C (decoy): A $95 pair with standard features (no noise cancellation).
What is the Decoy Effect

Suddenly, paying just $5 more for the premium $100 pair seems like a no-brainer. Option C—the decoy—makes Option B look much more attractive.

How the Decoy Effect Works

The decoy effect exploits our natural tendency to make relative comparisons. Instead of evaluating options on their own, we compare them to each other. The decoy creates an imbalance, or asymmetry, by being inferior to one of the other options in a way that makes the superior option (the target) look like a much better deal.

Example:

Imagine you’re at a movie theater:

  • Small popcorn for $3
  • Large popcorn for $7

Now, introduce a medium popcorn for $6.50. The large suddenly seems like a great value for just 50 cents more, even if you weren’t originally planning to buy a large. That’s the decoy at work—shifting your perception of value.

But here’s the catch: when the decoy is too obvious, it can backfire. Consumers are smart—they notice when they’re being manipulated. If the decoy is seen as a transparent ploy, people may feel insulted or distrustful, and the strategy could actually turn them away. You have to be strategic without underestimating your audience’s intelligence.

Key Research and Examples (Including Dan Ariely’s Economist Experiment)

One of the most famous experiments showcasing the decoy effect comes from Dan Ariely, a well-known behavioral economist. In a study involving subscription choices for The Economist magazine, participants were offered three options:

  • Online-only subscription: $59
  • Print-only subscription: $125
  • Print + Online subscription: $125

At first glance, the print-only option seems like a ridiculous choice—it costs the same as the print + online option but offers less value. That’s exactly the point. The print-only option is a decoy, included to make the print + online subscription look like a fantastic deal. The result? Most people chose the print + online option.

When the decoy (print-only) was removed, many more people chose the cheaper online-only subscription. This shows how a carefully placed decoy can significantly change decision-making, even for smart, rational consumers.

To dive deeper into this example and related research, check out these resources:

Real-World Applications: More Than Just Marketing

The decoy effect isn’t just a tool for getting you to buy more stuff (though it’s frequently used in marketing). You can find it in many areas of life, from politics to dating to everyday decisions. Let’s look at some real-world examples:

1. Politics

In elections, a third-party candidate (often with no real chance of winning) can act as a decoy. Their presence might split votes or make one of the two leading candidates appear like the obvious, more balanced choice. A more extreme or fringe candidate can make the moderate candidate seem much more reasonable.

2. Dating

Imagine you’re scrolling through profiles on a dating app. You come across two interesting options, and then a third profile that doesn’t appeal to you. This third profile (the decoy) can make one of the original options seem much more attractive in comparison. Suddenly, you feel like you’ve found “the one,” when in reality, the decoy just shifted your perspective.

3. Entertainment and Streaming Services

Streaming services often use pricing tiers as decoys. For instance, a streaming platform might offer three plans:

  • Basic Plan for $10/month (limited features)
  • Standard Plan for $15/month (HD streaming)
  • Premium Plan for $20/month (Ultra HD and more devices)

The Standard Plan might seem like the best deal compared to the Basic Plan, but with a decoy plan in the middle, it pushes many people toward the Premium Plan, which now seems like the best value for what you get.

4. Product Bundles

Retailers love using product bundles as decoys. For example, a bundle with fewer items might be priced similarly to a larger, more comprehensive bundle. This steers customers toward the larger bundle, as the smaller one now seems like a poor choice.

Ethical Considerations: Don’t Underestimate Your Audience

While the decoy effect is a clever way to nudge people toward a decision, it comes with ethical responsibilities. As a marketer or business owner, you must be careful not to overuse it or make it too blatant. Customers are not gullible, and if they realize they’re being manipulated, they can feel tricked or deceived.

Here are some ethical considerations to keep in mind:

  • Respect Your Audience’s Intelligence: Don’t assume people will blindly follow a decoy. When used poorly, it can backfire and create distrust.
  • Transparency Matters: If customers feel tricked, it could harm your brand in the long run. People appreciate businesses that are upfront and clear about their offerings.
  • Strategic and Thoughtful Use: The decoy effect should guide consumers to make decisions that are genuinely in their best interest, not just trick them into spending more.

Conclusion: The Decoy Effect in Your Marketing Toolbox

The decoy effect is a powerful psychological tool, but it’s one that requires finesse. As we’ve seen, it works by reframing choices and highlighting value—but the key is subtlety. People are smart, and when the decoy is too obvious, it can have the opposite effect, turning customers away rather than drawing them in.

As marketers, understanding the decoy effect allows us to present products or services in a way that makes decision-making easier for consumers. By carefully designing choice architectures, we can help guide people toward decisions that feel satisfying and beneficial to them.

But the most important takeaway? Always respect your audience. They’ll appreciate you for it, and your brand will be stronger in the long run.

For further reading on the decoy effect, behavioral economics, and related concepts, explore these insightful resources:

Picture of Omer Lewinsohn

Omer Lewinsohn

online entrepreneur with a passion for understanding the why behind human behavior in the digital world.