Decoy Effect, explained.
The decoy effect describes a choice shift caused by adding an option that is clearly worse than one existing option but not clearly worse than every alternative.
Why it happens
The added option can make its dominating neighbor easier to justify. People may compare local pairs rather than evaluating every option against a stable set of preferences. The underlying attributes of the original choices have not improved.
A dominated option may make its nearby competitor easier to justify.
Read the result
Choose before and after the third option appears. Check which option dominates the decoy and whether your comparison changed; one person's response is not proof of a universal effect.
A worked example
A subscription comparison
A reader compares a low-cost basic plan with a more expensive plan offering additional features.
A third plan appears at nearly the premium price but with fewer features than the premium plan.
The premium plan now has an easy comparison win, although its price and features are unchanged.
OPTIONAL DEEPER DETAILGo deeper: inside the model
Inside this model
Compare A (quality 70, price 40) with B (quality 90, price 70). A decoy has quality 70+20×closeness and price 70, so B dominates it when present. The interactive game records your choice with and without the decoy; no population share is inferred.
Where this idea is useful
A practical use
Notice when a pricing tier seems to exist mainly to make another tier look attractive.
A common misconception
“A third option necessarily makes the target objectively better.”
Its value has not changed. What changed is the comparison context, which may or may not affect a person's choice.
What this explanation leaves out
- Choice shifts are context dependent; this page is a choice exercise, not a fitted behavioral model.
How can I evaluate an offer without being steered by a decoy?
List the features you need and the prices you would accept before comparing the menu. Evaluate the original options against those criteria.
Did the option improve, or did the menu supply a more flattering comparison?
Associated thinkers
Further reading
Explore the original research or the teaching reference behind this experiment.