Why do we feel more strongly about one option after a third one is added?

The 

Decoy Effect

, explained.
Bias

What is the Decoy Effect?

The decoy effect describes how, when we are choosing between two alternatives, the addition of a third, less attractive option (the decoy) can influence our perception of the original two choices. Decoys are “asymmetrically dominated:” they are completely inferior to one option (the target) but only partially inferior to the other (the competitor). For this reason, the decoy effect is sometimes called the “asymmetric dominance effect.”

Illustration of the decoy effect: a stick figure chooses $12 over $5 due to a decoy option of $11 in the middle.

Where this bias occurs

Imagine you’re lining up at a movie theater to buy some popcorn. You’re not all that hungry, so you think you’ll get a small-sized bag. When you get to the concession stand, you see the small costs $3, the medium is $6.50, and the large is $7. You don’t really need a whole large popcorn, but you end up buying it anyway because it’s a much better deal than the medium. 

In this example of the decoy effect, we can consider the large popcorn as the target that the movie theater wants you to purchase, while the small popcorn is its competitor. By adding the medium popcorn as a decoy (since it is only 50 cents less than the large one), the movie theater persuasively convinces you to give in and make the bigger purchase instead.

Related Biases

Sources

  1. Harvard T. H. Chan School of Public Health. (2019, October 16). Sugary drinks. The Nutrition Source. https://www.hsph.harvard.edu/nutritionsource/healthy-drinks/sugary-drinks/
  2. Vedantam, S. (2007, April 2). The Decoy Effect, or How to Win an Election. The Washington Post. https://www.washingtonpost.com/wp-dyn/content/article/2007/04/01/AR2007040100973.html
  3. Potter, R. (2018, March 23). Nudging – the practical applications and ethics of the controversial new discipline. The Economics Review. https://theeconreview.com/2018/03/23/nudging-the-practical-applications-and-ethics-of-the-controversial-new-discipline/
  4. Nisbett, R. E., & Wilson, T. D. (1977). Telling more than we can know: Verbal reports on mental processes. Psychological Review, 84(3), 231-259. https://doi.org/10.1037/0033-295x.84.3.231
  5. Hendricks, K. (2018, December 7). The decoy effect: Why you make irrational choices every day (without even knowing it). Kent Hendricks. https://kenthendricks.com/decoy-effect/
  6. Chernev, A., Böckenholt, U., & Goodman, J. (2015). Choice overload: A conceptual review and meta-analysis. Journal of Consumer Psychology, 25(2), 333-358. https://doi.org/10.1016/j.jcps.2014.08.002
  7. Mortimer, G. (2019, February 17). The decoy effect: How you are influenced to choose without really knowing it. The Conversation. https://theconversation.com/the-decoy-effect-how-you-are-influenced-to-choose-without-really-knowing-it-111259
  8. Huber, J., Payne, J. W., & Puto, C. (1982). Adding asymmetrically dominated alternatives: Violations of regularity and the similarity hypothesis. Journal of Consumer Research, 9(1), 90. https://doi.org/10.1086/208899
  9. Kahneman, D., & Tversky, A. (1984). Choices, values, and frames. American Psychologist, 39(4), 341-350. https://doi.org/10.1037/0003-066x.39.4.341
  10. Simonson, I. (1989). Choice based on reasons: The case of attraction and compromise effects. Journal of Consumer Research, 16(2), 158. https://doi.org/10.1086/209205
  11. Hiebert, P. (2014, December 18). The paradox of choice, 10 years later. Pacific Standard. https://psmag.com/social-justice/paradox-choice-barry-schwartz-psychology-10-years-later-96706
  12. Robson, D. (2019, August 1). The trick that makes you overspend. BBC Worklife. https://www.bbc.com/worklife/article/20190801-the-trick-that-makes-you-overspend
  13. Mao, W., & Oppewal, H. (2011). The attraction effect is more pronounced for consumers who rely on intuitive reasoning. Marketing Letters, 23(1), 339-351. https://doi.org/10.1007/s11002-011-9157-y
  14. McLaughlin, J. E., Cox, W. C., Williams, C. R., & Shepherd, G. (2014). Rational and Experiential Decision-Making Preferences of Third-Year Student Pharmacists. American Journal of Pharmaceutical Education, 78(6). https://doi.org/10.5688/ajpe786120

About the Authors

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Dan Pilat

Dan is a Co-Founder and Managing Director at The Decision Lab. He is a bestselling author of Intention - a book he wrote with Wiley on the mindful application of behavioral science in organizations. Dan has a background in organizational decision making, with a BComm in Decision & Information Systems from McGill University. He has worked on enterprise-level behavioral architecture at TD Securities and BMO Capital Markets, where he advised management on the implementation of systems processing billions of dollars per week. Driven by an appetite for the latest in technology, Dan created a course on business intelligence and lectured at McGill University, and has applied behavioral science to topics such as augmented and virtual reality.

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Dr. Sekoul Krastev

Sekoul is a Co-Founder and Managing Director at The Decision Lab. He is a bestselling author of Intention - a book he wrote with Wiley on the mindful application of behavioral science in organizations. A decision scientist with a PhD in Decision Neuroscience from McGill University, Sekoul's work has been featured in peer-reviewed journals and has been presented at conferences around the world. Sekoul previously advised management on innovation and engagement strategy at The Boston Consulting Group as well as on online media strategy at Google. He has a deep interest in the applications of behavioral science to new technology and has published on these topics in places such as the Huffington Post and Strategy & Business.

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