Decoy effect
The decoy effect is a psychological phenomenon that influences decision-making by introducing a third, less attractive option—known as the decoy—alongside two other choices. This decoy is typically similar to one of the options and is designed to make one of the original choices appear more appealing, even if it was not the preferred option prior to its introduction. The effect demonstrates how our choices can be swayed by cognitive biases, leading individuals to make irrational decisions based on relative comparisons rather than absolute values.
For example, in a scenario where a consumer is choosing between two televisions, the addition of a third, more expensive but less desirable option can push them toward selecting the larger, more affordable model even if it was not their initial preference. The decoy effect has broad applications, particularly in marketing, where it can be used to enhance perceived value and influence consumer behavior. It also extends to political contexts, where the presence of a third candidate can alter voter perceptions and choices between the main candidates. Understanding the decoy effect can be valuable in recognizing how options are framed and how they can affect our decisions in various aspects of life.
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Decoy effect
The decoy effect is a concept in human behavior that deals with how people make choices. People who are presented with two choices that are either equally attractive or equally unattractive can be influenced in their choice by the addition of a third option—the decoy—that is similar to one option and either inferior or superior to the other. The additional possibility will make one option look less desirable and the other more desirable, influencing the decision-making process. The decoy effect has applications in a wide range of situations, from simple everyday decisions such as where to have lunch to major decisions such as purchasing a house or car or choosing a political candidate. The decoy effect can be used to the advantage of marketers, politicians, and others because few people are aware of how the decoy effect influences their decisions.
Background
The word decoy originated as cavea, the Latin word for “cage.” During the twelfth through sixteenth centuries, the Latin cavea became de kouw, or “the cage,” in Middle Dutch. The term was applied to the practice of using tame ducks to lead wild ducks from their natural habitat into cage-like areas of water covered with netting so they could be caught and domesticated. De kouw eventually became de kooi in Dutch, which was Anglicized to decoy in the mid-sixteenth century. The phrase took on the meaning of an object that was used to trick or deceive someone or something into taking an action that might otherwise not be taken.
Experts are not sure why the decoy effect works. The fact that it is present in very young children and even in animals, including some birds, frogs, and monkeys, indicates that it is evolutionary in nature. For instance, frogs choose mates based on appearance and volume of the sounds they make. Researchers who altered the appearance of prospective mates or amplified the sound of their croaking were able to influence the choices of female frogs.
Although the effect has existed throughout human history, it was identified and named in the early 1980s by researchers at Duke University led by Joel Huber. It was later expanded upon by Stanford marketing professor Itamar Simonson. It was popularized outside of academic circles by the 2008 book Predictably Irrational, written by Duke University professor Dan Ariely.
Overview
According to the decoy effect, people can be influenced to make a choice between two options by the introduction of a third choice. The third option is generally completely inferior to one of the other two choices and similar to but slightly different from the other. The third option makes one option look better in comparison to itself, influencing the person to choose that option. This happens even when the option was clearly not preferred until the third decoy option was added.
Experts say that people are nearly always more likely to choose the option closest to the clearly inferior option, even when that choice is not the rational one. This is an example of cognitive bias, in which people experience an error in thinking that is based not on rational, thought-out reasons but on feelings or beliefs. Cognitive biases can occur in any thought process, such as remembering, evaluating, or reasoning. The decoy effect works because it triggers a mistake in evaluating and reasoning that changes how the person views the original options.
For example, a person is trying to decide which television to buy, one that is 32 inches and costs $200 or one that is 50 inches and costs $400. In this scenario, individual people will make a decision based on whether cost or size is more important to them. For those who want a bigger screen or who want to spend less, the choice will be relatively easy, and people will be guided by their priorities.
However, not everyone who is buying a television has priorities that their choice must meet. Some will like the idea of a bigger television but prefer to spend less money and be uncertain about which choice to make. When a third choice is added, an option that is 43 inches and costs $450, researchers have found that many people will choose the 50-inch television for $400. The third option is inferior to both of the others because it costs more than both. However, it is close in size to the larger option and more expensive, so it makes the 50-inch television look better by comparison. This influences people to choose the larger, more expensive television, even if they were hesitating to spend that much money earlier.
The third television is the decoy option. It is also known as an asymmetrically dominated option. Asymmetrical means that part of it does not correspond equally to something else. In this case, the third option is more expensive than the other two options, so it is dominated by both in price. This affects how the customer views the price. On the other hand, it is larger than one of the original choices and smaller than the other. This means it is dominated by one attribute and not by the other, so its dominance is asymmetrical. Its asymmetry, with a larger price for a smaller size, makes the larger but less expensive television look like a better choice.
One way that merchandisers implement the decoy effect is with “original” price or “manufacturers suggested price” labeling. If a shopper is comparing two jackets, one that is $25 and one that is $50, the choice is likely to be influenced by the shopper’s preference for each versus the cost. However, if the more expensive jacket is labeled “originally priced at $125,” it will appear to be the better choice because it has a greater perceived value.
The decoy effect has many applications. It can be used in marketing to influence purchases and in politics to influence how people vote. For example, experts have found when there are three candidates in a political race, the third-place candidate usually affects the outcome not by siphoning votes that would have gone to one of the other candidates but by affecting how people see the other two. The third candidate serves as a decoy that makes one of the other two seem better than the other.
Bibliography
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