“Sometimes the worst option is the one that sells the best.”
Welcome to Part 2 of our psychology-meets-marketing series. In the last post, we explored anchoring bias—how the first number or offer shapes all the rest. This time, we’re diving into an equally fascinating phenomenon: the decoy effect, also known as asymmetric dominance.
This cognitive bias influences how customers make decisions—often without realizing it. Marketers who understand the decoy effect can nudge consumers toward more profitable or preferred choices simply by adding a third, strategically designed option.
What Is the Decoy Effect?
The decoy effect occurs when consumers are more likely to choose one of two options because a third, clearly inferior option (the decoy) skews their perception of value.
The decoy doesn’t exist to be chosen. Instead, its purpose is to make one of the original choices appear more attractive by comparison.
This effect is especially useful in pricing strategies, product bundles, and subscription models.
Examples of the Decoy Effect in Marketing
The Economist Subscription Experiment
One of the most cited examples:
- Online-only subscription: $59
- Print-only subscription: $125
- Print + online subscription: $125
Most people chose the third option because it felt like a no-brainer—you get both for the same price as one. The middle option (print-only) was the decoy—no one picked it, but it made the third choice more appealing.
Fast Food Upsizing
Imagine these drink options:
- Small: $1.59
- Medium: $1.79
- Large: $1.99
The medium is rarely chosen. But it makes the large seem like a great value. This pricing strategy uses the decoy effect to push people toward higher margins.
Tech Plans and Feature Bundles
You may see:
- Basic: $29/month (limited features)
- Pro: $49/month (most popular)
- Ultra: $95/month (overkill for most)
Even if customers weren’t going to pick the $49 option originally, the presence of the $95 option (decoy) makes the middle plan seem far more reasonable.
Why the Decoy Effect Works
The decoy creates asymmetrical dominance—it’s clearly worse in one area (price, features) and only slightly better or equal in others. This imbalance directs customers toward the dominant (but not necessarily cheapest) alternative.
How to Use the Decoy Effect in Your Business
1. Bundle Strategically
Introduce a third option that makes the middle or high-tier option seem more valuable without necessarily enhancing the product itself.
2. Highlight Value Differences
Use visual contrast (side-by-side comparisons, bold highlights) to reinforce the perceived advantages of the “winning” option.
3. Test Before You Commit
Run A/B tests to see if the decoy truly shifts buyer preference before rolling out across your entire product line.
4. Keep It Ethical
Avoid manipulating people with fake options. The decoy should be a real offering, just positioned to enhance clarity—not trick.
Quick Reference Table
| Tier | Price | Features | Purpose |
| Basic | $29 | Limited | Entry-level option |
| Pro (Target) | $49 | Most used/Best value | Desired consumer choice |
| Ultra (Decoy) | $95 | More, but not needed | Make Pro feel reasonable |
Decoy Effect vs. Anchoring Bias
| Bias | Anchor Bias | Decoy Effect |
| Based on… | First piece of info (price/value) | Comparative value of three-tier options |
| Role of third item | None | Crucial — the “decoy” shapes the outcome |
| Use case | Sales, discounts, initial offers | Subscriptions, pricing plans, bundling |
Final Thoughts
The decoy effect proves that sometimes, what you don’t want your customers to choose is exactly what guides them to the choice you do want. It’s not about manipulation—it’s about helping people make clearer decisions by adding structure to their choices.
In the final part of this series, we’ll explore confirmation bias—how customers tend to see what they want to see, and how savvy marketers can work with (not against) that instinct.