“Every bird has its decoy, and every man is led and misled in his own peculiar way”
-Johann Wolfgang von Goethe
How many times have you been out to purchase something and ended up with more than you essentially went for? The decoy effect may be the explanation for how you’re being influenced without knowing it. This is a pricing strategy that offers 3 options and one of which is only designed to get you to switch your choice to the more profitable one. The decoy or “asymmetrically dominated” option is priced specifically to make the others look more appealing in perceived value. Most of us have insane purchase anxiety from choice overload. I know I’m one of those people. It happened just the other day when I walked into a soap store and was immediately overwhelmed with choices surrounding me. I didn’t even know where to start. If you’re like me, this forces you to simplify by reducing everything down smaller into pricing and quantity. And while a decoy may sound manipulative in some situations it can be justified if the ends are ethical, such as using less water, less energy consumption or making healthier lifestyle choices. Here’s how it works in laymen’s terms. The first option is the target, the second option is one that competes with the competitor and the last is the decoy option designed to nudge you into choosing the target. For example, you go to a coffee shop and order a cappuccino. There are three sizing options. The 120z is listed at $4.99, the 16oz is priced at $0.50 more and the 20oz is just $0.50 more than the medium. The best value for the price seems to be the large in this situation. Why wouldn’t you get that size? Your choice to opt for the more expensive option happens at a subconscious level. We believe that we are making this choice of our own free will and decoys allow us to justify these choices. The ethics of the decoy effect can be questionable if the brand’s intentions aren’t moral. From a marketing stand point, this is great to know. However, it should be noted that those aged 65 and over almost never get caught up in the decoy effect and it tends to work best for those who are unfamiliar with a product. Those that have strong prior preferences are far less likely to fall for the decoy effect.
