Decoy Effect

  • cognitive bias
  • behavior

The Decoy Effect causes a customer to change their preference between two options (A & B) when an asymmetric third option (C) is offered. The third option (C) is inferior in all aspects to A but only some to B and better than other aspects in B. This third option in effect makes A or B more attractive, when in reality it should be unrelated.

Examples of the Decoy Effect

  • Sales pages that provide a high priced item to encourage customers to buy a lower priced, but still expensive item.
  • Real estate agents first showing buyers houses in the most expensive local market to encourage them to buy in the next most expensive neighborhood.
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