The Behavioral Economics in Marketing’s Podcast Decoy effect | Definition Minute | Behavioral Economics in Marketing Podcast
Jan 20, 2023
A quick look at the decoy effect, explaining how adding a third option can shift choices. A simple popcorn pricing example shows the bias in action. A brief intro to the Definition Minute series and why these short clips matter for marketers.
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Use A Decoy To Nudge Purchases
- Use an asymmetrically dominated option to steer customers toward a target product.
- Present a middle option priced close to the premium to make the premium appear like better value.
How A Decoy Shifts Choice
- The decoy (asymmetrical dominance) effect shifts preferences between two options when a third, dominated option appears.
- Introducing a slightly inferior middle option can nudge people toward the larger, more expensive choice.
Popcorn Example That Nudges Bigger Buys
- Sandra gives a popcorn example where small, medium, and large prices push people to buy large over small.
- A medium priced just pennies less than large makes the large feel like better value and sways choice.