The Decoy Effect - Deepstash

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The Psychology of Free Shipping

The Decoy Effect

Often an extra choice is given to the buyer (looking at a set of options) to tilt the purchase in favour of a particular option. The decoy option is only there to shift the mindset, and is also called the asymmetrically dominated option.

The decoy effect changes the perception of the offer in the eyes of the buyer.

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The decoy effect
The decoy effect

It happens when consumers change their preference between two options when presented with a third option, or decoy.

The decoy is priced to make one of the other options much more attra...

How decoys work

When consumers are faced with many alternatives, they often experience choice overload that increases anxiety and hinders decision-making.

Consumers try to reduce this anxiety by selecting only a couple of criteria (say price and quantity) to determine the best value for money.

A decoy steers you in a particular direction while giving you the impression that you are making a rational, informed choice.

Decoy example in the market

Consider the price of drinks at a well-known juice bar: a small (350 ml) size costs $6.10; the medium (450 ml) $7.10; and the large (610 ml) $7.50. The medium is a slightly better value than the small, and the large better still. The medium is designed to be the decoy, steering you to see the biggest drink as the best value for money.

If you buy the biggest, was it because you made a sensible choice, or have you been manipulated to opt for bigger than intended?

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