Decoy Effect: The Sneaky Sales Trick That Turns Shoppers into Spenders

Imagine yourself at the movie theater, deciding whether to buy a small popcorn for $5 or a large popcorn for $8. You’re wondering if the extra popcorn is worth the extra money, so you consider the small size. Suddenly, the cashier offers you medium popcorn for $7.50, and you buy it instead of the small one.

However, the medium popcorn is a lure—a true distraction. By introducing it, the theater has made the large popcorn seem like a better value and the small popcorn seem less attractive. This is a classic marketing strategy known as the Decoy Effect, which aims to influence your decision-making.

In essence, the Decoy Effect presents you with two options and then adds a third option designed to make one of the original options more appealing. This can sway your decision-making and lead you to choose the more expensive option.

Studies have shown that framing can influence our decisions, as a well-designed decoy can shift opinions by up to 40%. One well-known example of the decoy effect in action is from The Economist, the influential weekly international news and business publication. Behavioral economist Dan Ariely’s book Predictably Irrational (2008) describes how the magazine offered a digital subscription for $59, a print subscription for $125, and a combined print and online subscription for the same price of $125. The print-only subscription was clearly a decoy, designed to make the combined subscription seem like a better value, and it worked; the presence of the decoy significantly increased the uptake of the combined subscription.

While psychologists are still debating the exact reasons for this cognitive bias, one theory suggests that the decoy provides a straightforward justification for a decision that might otherwise seem arbitrary.

Idea for Impact: If you run a business, you too can use the decoy effect to steer consumers towards certain purchasing decisions that benefit your bottom line. By strategically adding a decoy product to your offerings, you can provide perceived value for your customers while boosting your profits.