The Decoy Effect: How the Industry Tricks You into Buying More Expensive Products
There are many cognitive biases we have to watch out for - in a recent article, I unveiled 11 of them.
Some days ago I stumbled upon another one: the Decoy Effect. It’s a powerful strategy to increase the sales for a product.
What is the Decoy Effect and how does it work?
Decoys are intentionally unattractive products created with the awareness that they won’t sell much. Their main function is to enhance the perceived value of other, similar products by making them appear superior.
The decoy effect is also known as the asymmetric dominance effect (for those who want to show off a little at the next party)
An example
An example you might already experienced yourself occurs at the cinema: Before a movie starts you equip yourself with popcorn, but you have to decide between different sizes. There is a small bucket costing 3.5 $ a medium size costing 6 $ and a large bucket costing 7 $.
Which one would you buy?
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| Image created in cooperation with DALL·E 3 |
In this scenario the large bucket seems like a real bargain. It is just slightly more expensive as the second option. However, the second product is just a decoy luring you into taking the larger option.
But also Ikea does it as this article shows.
How can you avoid the Decoy Effect?
The tricky part is, that even if you know that the decoy effect exists, you can sometimes fall for it. This is your System 1 at work as Daniel Kahnemann would put it.
You might find the following tactics effective in avoiding the decoy effect:
- Be suspicious if you are offered three options.
- Activate your System 2 and don’t decide based on your gut feeling (the decoy is working against you here).
I used the following sources for this article:
- Thinking, Fast and Slow by Daniel Kahnemann
- Article on LinkedIn
- Article on insidebe