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What is the decoy effect?

PsychologyLesson on requestFree to read

Quick answer

The decoy effect is when adding a third, less attractive option nudges people toward a specific choice. A cleverly priced 'decoy' makes one of the original options look like a much better deal — a tactic widely used in pricing menus.

Key things to understand

  1. A third 'decoy' option shifts which choice we prefer.
  2. The decoy makes a target option look like a great deal.
  3. It exploits how we compare options relative to each other.
  4. It's common in pricing tiers and menus.

People also ask

What is the decoy effect?
When adding a deliberately inferior option steers people toward a particular, more profitable choice.
What's a classic decoy effect example?
A pricing tier where a 'large' costs nearly the same as a 'medium', making the large look like a steal.
Why does the decoy effect work?
We judge options by comparison, so a decoy reframes one choice as clearly superior.