The Decoy Effect: The Invisible Hand Guiding Your Choices
It starts at the cinema counter.
You are choosing popcorn. The prices are simple enough. A small for $4. A large for $7. You lean toward the small — until the cashier points to a “medium” for $6.50. Suddenly, the large feels like a far better deal. You hand over your money, smiling at your cleverness. But you were never in control.
This is the decoy effect — a subtle yet highly effective marketing technique where an intentionally unattractive option is added to influence your decision. It is not meant to be chosen. It exists to push you toward the option the seller wants you to buy.
The psychology is straightforward. Humans tend to make choices through comparison. When faced with two options, we weigh the pros and cons. But if a third option is introduced that is similar to one choice but clearly inferior, it makes the similar but better option appear far more appealing. That third option is the decoy.
The most famous study on the decoy effect comes from behavioural economist Dan Ariely. He tested three subscription offers for The Economist magazine:
• Web-only subscription for $59
• Print-only subscription for $125
• Web-and-print subscription for $125
The print-only offer made no sense — why pay the same for less? Yet it was there for a reason. When all three were offered, most people chose the web-and-print option. But when the decoy (print-only) was removed, far fewer people chose the more expensive plan. The decoy had done its job — it made the most profitable option look like the smartest one.
This tactic is everywhere. Restaurants add overpriced dishes not to sell them, but to make other high-margin items seem reasonable. Electronics retailers offer three versions of a product: basic, premium, and “super-premium” with a minor upgrade for a much higher price. The super-premium is rarely expected to sell. It exists to steer customers toward the profitable middle tier.
Even travel sites use decoys. A hotel might list a basic room, a deluxe room, and a “slightly better” deluxe room for only a little more. Most people then choose the “better” deluxe, thinking they are maximising value, when in fact they are simply choosing the option the hotel has guided them toward all along.
The power of the decoy effect lies in how invisible it feels. You are not aware that you are being influenced. You believe you are making a rational choice. But your decision was nudged by a carefully planted reference point designed to make one option shine.
Breaking free from the decoy effect requires stepping back from the setup. If one option suddenly seems far more appealing, ask yourself whether it would still be attractive without the other choices on the table. Would you still want the large popcorn if there were no medium? Would you still choose the “better” deluxe if it was the only deluxe available?
In marketing, the best way to win is not to give customers absolute freedom — it is to make them feel free while gently guiding them to where you want them to go. The decoy effect is the quiet hand behind that illusion.
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Disclaimer: Much of the text was found on Facebook, but the Author cannot be identified…
