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Decoy Effect

Adding a deliberately inferior third option changes which of the original two people choose.

Definition

Huber, Payne and Puto (1982) showed that introducing an option dominated by one of the existing options, but not by the other, shifts preference towards the dominating option. It violates the principle that adding an irrelevant alternative should not change a choice.

Established research. Originates in published research and has been replicated. The effect is real. Its size in your product still needs measuring.

On this page
  1. Definition
  2. The design and ethics question
  3. In practice
  4. Sources
  5. Continue from here

The design and ethics question

A decoy is by construction an option the seller does not want anyone to take. Including one to steer choice is manipulation, even when it is legal. The defensible version is different: making sure real options are genuinely comparable, so users can evaluate them on the attributes they care about.

If a tier exists only to make another tier look good, that is worth naming honestly in the team, because it will eventually be named by a customer.

Do

  • Make each option genuinely useful to some segment.
  • Present comparable attributes so real comparison is possible.
  • Explain who each option is for.

Do not

  • Include an option designed to be rejected.
  • Obscure attributes to prevent comparison.
  • Use a decoy in a context where the user cannot easily change their mind later.

In practice

Pricing tiers with a real audience

SaaS pricing

Three tiers each aimed at an identifiable segment, with a clear statement of who each is for, gives users a comparison rather than a nudge. If nobody should buy a tier, remove it.

Sources

Where a source establishes something narrower than the popular reading of it, the note says so.

  • Adding asymmetrically dominated alternatives: violations of regularity and the similarity hypothesis

    J. Huber, J. W. Payne and C. Puto, Journal of Consumer Research, 1982

Continue from here

Each link says what the connection is, so you can tell a principle from an alternative from a thing people mix this up with.

Applies when you are designing

A Pricing Page

Explains

The mechanism underneath these entries.

Applied through

Where this shows up as a concrete interface decision.

Related concept

Connected closely enough to change how you apply this.

Nearby in the Atlas

Adjacent territory, found through shared tags rather than a stated link.

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