decoy effect

Decoy Effect

Decoy Effect Jonathan Poland

The decoy effect is a cognitive bias that occurs when people make choices based on the relative attractiveness of options. When faced with a list of options, the presence of an obviously inferior option, known as a “decoy,” can influence people’s decisions. For example, a marketer may include a decoy option in a price list to make the other options appear more appealing. This can lead to a higher conversion rate, as customers compare the options and choose the better deal, feeling more confident about their decision.

The decoy effect is a well-known phenomenon in psychology and marketing, and it has been studied extensively. Research has shown that the decoy effect can be highly effective in influencing people’s choices, even when they are aware of it. This is because the human brain is wired to make decisions based on relative comparisons, rather than absolute values.

Overall, the decoy effect is a powerful tool that can be used to influence people’s decisions. By including a decoy option in a list of choices, marketers can make the other options appear more attractive and increase the likelihood of a sale.

Here are a few examples of the decoy effect in action:

  • A restaurant offers three meal options: a budget-friendly meal, a premium meal, and a decoy meal that is more expensive than the premium meal but offers fewer options and less value. Customers are more likely to choose the premium meal because it appears like a better deal compared to the decoy meal.
  • A clothing store offers three shirt options: a basic shirt, a premium shirt, and a decoy shirt that is more expensive than the premium shirt but offers fewer features and lower quality. Customers are more likely to choose the premium shirt because it appears like a better deal compared to the decoy shirt.
  • A travel website offers three vacation packages: a budget-friendly package, a premium package, and a decoy package that is more expensive than the premium package but offers fewer amenities and less convenience. Customers are more likely to choose the premium package because it appears like a better deal compared to the decoy package.

These are just a few examples of how the decoy effect can be used to influence people’s choices. The specific use of the decoy effect will depend on the context and the goals of the person using it.

Learn More
Technology Ethics Jonathan Poland

Technology Ethics

Technology ethics refers to the principles that guide the development, use, and management of technology, taking into account factors such…

Customer Convenience Jonathan Poland

Customer Convenience

Customer convenience refers to any aspect of the customer experience that makes it easier and more efficient for them. This…

A/B Testing Jonathan Poland

A/B Testing

A/B testing, also known as split testing or experimentation, is a statistical method used to compare two versions of a…

Market Penetration Jonathan Poland

Market Penetration

Market penetration refers to the process of increasing the market share of a company’s existing products or services within a…

Labor Specialization Jonathan Poland

Labor Specialization

Specialization of labor involves dividing work into specific roles or tasks, with the goal of improving productivity, efficiency, quality, and…

Operations Planning Jonathan Poland

Operations Planning

Operations planning involves identifying and implementing strategies and tactics to optimize the core processes and practices that enable a business…

Brand Experience Jonathan Poland

Brand Experience

Brand experience refers to the overall perception and feelings that a consumer has while interacting with a brand. It includes…

Is Greed Good? Jonathan Poland

Is Greed Good?

Greed is good is a paraphrased quote that originates with the 1987 film Wall Street. It is important to note…

Good Customer Service Jonathan Poland

Good Customer Service

Good customer service is a service experience that goes above and beyond to meet the needs and expectations of customers,…

Content Database

Search over 1,000 posts on topics across
business, finance, and capital markets.

Examples of Consumer Goods Jonathan Poland

Examples of Consumer Goods

Consumer goods are physical products that are purchased by individuals for their own personal use. These goods are typically tangible,…

Working Style Jonathan Poland

Working Style

Working style refers to an individual’s preferred approach to performing their job and completing tasks. This can include factors such…

Alcon Jonathan Poland

Alcon

Alcon is a global medical company that is focused on developing and manufacturing innovative products to improve the lives of…

Talent Development 150 150 Jonathan Poland

Talent Development

Talent development is a critical aspect of organizational growth and improvement, and it focuses on the processes, strategies, and practices…

ERG Theory Jonathan Poland

ERG Theory

ERG theory is a motivational theory that was developed by Clayton Alderfer. It is an extension of Maslow’s hierarchy of…

Brand Loyalty Jonathan Poland

Brand Loyalty

Brand loyalty refers to the degree to which a consumer consistently prefers one brand over others in a particular product…

Vertical Integration Jonathan Poland

Vertical Integration

Vertical integration is when a single company owns multiple levels or all of its supply chain.

Diversified Real Estate Jonathan Poland

Diversified Real Estate

Real Estate Investment Trusts that acquire, develop, manage, and dispose of diversified property holdings that have no specific portfolio composition.…

Adaptive Performance Jonathan Poland

Adaptive Performance

Adaptive performance is the ability of an individual to perform well in changing, uncertain, and stressful situations. This type of…