Decoy Effect

The decoy effect occurs when adding an asymmetrically dominated option makes another choice look more attractive by comparison. People often evaluate value comparatively rather than independently. In Ariely's subscription example, a print-only option priced the same as a print-and-digital bundle makes the bundle look more attractive because it clearly dominates the print-only choice. Check this: When you see three options, ask whether one mainly changes how the other two compare.

The decoy effect happens when adding an asymmetrically dominated option makes the dominating option look more attractive by comparison. People often evaluate value comparatively rather than independently.

In Ariely's magazine-subscription example, the baseline choice is a cheaper digital-only option versus a more expensive print-and-digital bundle. When a print-only option is added at the same price as the bundle, the bundle can look more attractive because it clearly dominates the print-only choice.

The decoy can work because it changes the comparison set. Instead of weighing the digital-only and bundle options on their own, people notice that one option is clearly worse than another at the same price.

One way to check yourself is to compare each option on its own and ask whether your preference changes when the decoy disappears. If it does, the comparison set may be shaping your choice more than your actual needs.

Research in controlled experiments shows that asymmetrically dominated decoys can shift preferences toward the dominating option.

• Huber, Payne, and Puto (1982): Classic early paper on the effects of adding asymmetrically dominated alternatives, showing that adding a dominated decoy systematically increases the share of the dominating option across multiple product categories. [1]
• Ariely (2008): Popularized the decoy effect for general audiences with a magazine-subscription example that included a cheaper digital-only option, a same-price print-only option, and a same-price print-and-digital bundle. [2]
• Trueblood et al. (2013): Provided evidence that context effects, including attraction-like effects, can appear in perceptual decision tasks, suggesting these effects are not limited to consumer-choice settings. [3]

The listed sources mainly demonstrate the decoy effect in controlled settings. Stronger claims about when the effect weakens, disappears, or fails to generalize should be supported with additional sources.