Cognitive biases
The decoy effect: how one extra option changes our choice
Gleb wants to swim in the mornings and is choosing a pool membership near his home. The website has two plans. “Light” is €20 a month for 4 visits. “Full” is €40 a month for 8 visits. A visit costs the same in both, €5. The only question is how many times Gleb will really go. He can’t decide and closes the site. A week later he sees a third plan: “Medium,” €44 and 6 visits. There is no reason to take it: it costs more than “Full” and gives less. But next to it, “Full” suddenly looks like a bargain, and Gleb buys it.
This is the decoy effect: a third option that is clearly worse than one of the two can shift the choice toward the one that looks better beside it. The decoy itself is needed by almost nobody. It just makes one comparison easy.
An honest caveat right away. The effect is clearest when options are compared by numbers in a table. With pictures, and with things you can try, it often weakens or disappears. Below, we look at what studies have shown, what scientists disagree about, and how not to let an extra option choose for you. In the middle of the article you will pick a membership for Gleb yourself.
Contents
In short: how the decoy effect works
What the decoy effect is
The effect was described by the marketing researchers Joel Huber, John Payne, and Christopher Puto in a 1982 paper. They wanted to test a rule that was considered true for rational choice. It goes like this: if you add a new option, it may take some buyers away from the old ones, but it cannot make one of the old ones more popular. Whoever wanted “Full” wanted it before, too.
The scientists added to two options a third, special one. It was worse than one of them on every point, but not worse than the other. Like Gleb’s “Medium”: compared with “Full,” it loses on both price and visits. But compared with “Light,” it has a plus: more visits. Such an option is called a decoy. Almost nobody chose it. But the option that beat it was chosen more often than without it. The rule turned out to be broken.
Later, a summary of many such experiments showed an important detail. The decoy usually helped the higher-quality option. It generally did not help the simpler one.
Try it yourself: Gleb’s membership
This takes a couple of minutes. Here is what will happen.
Step 1. You choose a membership for Gleb from a table the way you would for yourself. Which table you see is decided by the computer: different players get different tables.
Step 2. We show both tables. You switch between them and see how they differ.
Step 3. You move a slider for the price of the third plan and see when it works as a decoy and when it doesn’t.
Why are the tables different? The decoy effect is a difference between groups of people: those who saw two plans and those who saw three. You will see only one table and choose once. So from your choice you can’t tell whether the decoy worked on you. The game shows how it is built, but does not test whether you fell for it. And the table has only numbers, no pictures, because it is with numbers that the effect is best seen in experiments.
What usually happens. In the classic experiments, the option next to which the decoy stood was chosen more often than without it. But this shift is visible only across a large group of people. If you read the beginning of the article, you already knew the trick and may have looked for a catch. That changes the choice too.
When it is not a mistake. If Gleb really will swim eight times a month, “Full” suits him, and the decoy spoiled nothing. It becomes a mistake when a person takes more than they need only because an even worse option stands beside it.
Why the decoy works
Back to Gleb. Comparing “Light” and “Full” is hard. One is cheaper, the other gives more. You have to decide whether four extra visits are worth €20. The table has no answer; it depends on how often Gleb will go.
But comparing “Full” and “Medium” is easy. “Full” is better on both points, no need to think. The authors of the classic experiment explain the effect exactly this way: the decoy works when a person notices that one option is simply better than another. It is an easy argument to follow, and the choice is drawn toward it.
From this it is clear when the effect weakens. According to the same authors, this happens if a person already knows firmly what they want. Or if the superiority is hard to notice: the options are far apart and there is little time. Or if the decoy is of no interest to the buyer at all, and they don’t even consider it.
How far the effect can be trusted
Here scientists really do disagree. That is why it is marked on the map: “Interpretation debated.”
In work by Shane Frederick and his colleagues, the effect usually appeared only when every characteristic of a product was a number. When a drink was given to taste or a hotel room was shown in a photo, there was usually no effect. The authors doubted how important it is for real purchases. In another study, scientists tried 91 times to get the effect with different products, and it appeared reliably only 11 times. If the options were described in words or pictures, the result was no better than chance.
The authors of the classic experiment replied: if you repeat the experiment as it was set up, the effect is reproduced. They did not offer it as a universal sales tool. It was important to them to show that choice depends on what other options lie nearby.
Then came new checks. An experiment with ordinary, “real” options, built under the strict conditions of the authors of the classic work themselves, showed zero effect. And in a study whose plan was published in advance, before data collection, the effect turned out to be robust. But when the characteristics were shown not as numbers but as bar charts, it was noticeably weaker.
The conclusion is this. In tables with numbers, the decoy effect is real. How often it decides our ordinary purchases is still an open question.
Where it shows up
Plans and subscriptions. This resembles the conditions where the effect is best seen in experiments: a table, columns with numbers, several options side by side. If one plan is clearly worse than its neighbor, it is useful to ask why it is there.
Menus and sizes. Sometimes a medium portion costs almost as much as a large one. Maybe it is a decoy, or maybe those are just the prices. From the outside you can’t tell. This is an everyday observation.
Next to the decoy effect stands the anchoring effect: there, the first number we see influences our estimate, while here it is a whole extra option. And the framing effect: there, a decision changes depending on how the same choice is described.
How to choose more calmly
The decoy effect is one of the biases on the cognitive bias map, in the section on decisions.
Frequently asked questions
So is every middle plan a decoy?
No. A decoy is an option that is worse than its neighbor on every point at once. A middle plan that is cheaper than the large one and gives more than the small one is simply another choice. And even a real decoy does not always work.
How is this different from the anchoring effect?
An anchor is a number we push off from when we estimate something. A decoy is a whole option that changes what we compare with. It works not through a number but through the easy comparison “this one is better than that one on everything.”
Does the decoy help the cheaper option too?
As a rule, no. According to the summary of many experiments, the decoy usually helped the higher-quality option and generally did not help the simpler one. And even for the higher-quality one it does not always work.
