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 plate
Reach for this when
- Designing pricing or plan comparison.
- Reviewing whether an option exists for a real audience.
- Setting out pricing tiers, plan comparisons or any set of options with a preferred answer.
Common mistakes
- Assuming the laboratory effect size transfers to your product.
- Building manipulation into a pricing page.
- Preventing comparison to steer a choice.
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.
Three tiers, read honestly
A middle option that genuinely suits a real group is a service. One that exists only to make its neighbour look good is a manipulation, and the difference is whether anyone should buy it.
| Tier | Legitimate version | Decoy version |
|---|---|---|
| Low | Serves people with small needs, and they are happy | Crippled so that nobody could reasonably choose it |
| Middle | The best fit for the largest group | Priced to make the top tier look cheap |
| High | Serves demanding users, and some choose it | Exists to anchor, and is never expected to sell |
In practice
- i.
Pricing tiers with a real audience
SaaS pricingThree 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.
- ii.
The tier nobody was meant to buy
The testIf the product team would be disappointed by someone choosing a tier, that tier is a decoy. The question is not whether the pricing works. It is whether every option is one a reasonable person could be well served by.
Local chart
BIAS·012 · Region I · Grid B2
This entry and the entries it is stated to connect with. Each line is labelled with what the connection means.
Sources
Where a source establishes something narrower than the popular reading of it, the note says so.
- [1]
Adding asymmetrically dominated alternatives: violations of regularity and the similarity hypothesis
J. Huber, J. Payne and C. Puto, Journal of Consumer Research, 1982
The original demonstration, in a controlled setting with clearly comparable attributes.
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
Related concept
Connected closely enough to change how you apply this.
- Anchoring BiasBIAS·001 · Cognitive bias
- Framing EffectBIAS·003 · Cognitive bias
- Choice OverloadPSY·002 · Psychology
Nearby in the Atlas
Adjacent territory, found through shared tags rather than a stated link.