The Decoy Effect: Influencing Purchase Decisions

08 January 2025

In the world of marketing, companies continuously seek new ways to influence consumers' purchasing decisions. One intriguing behavioral psychology phenomenon often employed by marketers is the Decoy Effect. Although it might go unnoticed, this strategy frequently appears in everyday life, whether shopping online or in physical stores.

The Decoy Effect (also known as the asymmetric dominance effect) is a marketing technique that uses a third option (the decoy) deliberately designed to make one of the existing choices appear more appealing to consumers. This decoy is not intended to be selected but exists to steer consumers toward the option that benefits the company the most.

Simply put, when consumers are presented with two options, the presence of a third, less appealing option makes one of the original choices seem more advantageous. A consumer's decision can shift simply because of this "irrelevant" third choice.

How the Decoy Effect Works

To understand how the Decoy Effect operates, let’s explore the basic principles behind this phenomenon:

  1. Presence of an Additional Option: Consumers often feel confused when given two nearly similar choices, making it difficult to decide between them.
  2. Making a Choice More Appealing: By adding a third option that is less advantageous or more expensive without offering additional value, businesses can make one of the two original choices look better than before.
  3. Limited Rationality: Consumer decisions are not always entirely rational and are often influenced by how options are presented. The Decoy Effect exploits this psychological bias.

Why is the Decoy Effect Effective?

  1. Comparison Influence: When there are more options to compare, consumers tend to favor the choice that offers better value or appears more rational.
  2. Reducing Ambiguity: Adding a clearly less advantageous option makes consumers feel their decision is easier and clearer.
  3. Enhancing Perceived Value: Consumers often perceive that they are getting more by choosing the more expensive option, especially when a “worse/less advantageous” alternative is nearby.

Examples in Everyday Life

Streaming Subscription Plans

Imagine a streaming platform offers three subscription plans:

  • Plan A: Monthly Subscription – IDR 50,000/month
  • Plan B: Annual Subscription – IDR 500,000/year (more economical than the monthly plan)
  • Plan C: Annual Subscription – IDR 600,000/year, includes exclusive access to premium content and additional features

Initially, Plan B (IDR 500,000) might seem like the best choice because it’s more economical than Plan A. However, the presence of the more expensive Plan C (IDR 600,000) makes Plan B appear as the more “rational” choice because it now seems more affordable and offers better value than Plan C. While some may still be drawn to the premium features in Plan C, its presence drives more consumers to choose Plan B.

Restaurant Menus

Restaurants often use the Decoy Effect in their menus. Imagine a menu offering two choices:

  • Small Salad: IDR 50,000
  • Large Salad: IDR 75,000

Then, the menu adds a third option:

  • Jumbo Salad: IDR 100,000


Most customers won’t choose the Jumbo Salad, but they are more likely to opt for the Large Salad priced at IDR 75,000 because, compared to the Jumbo Salad, the price now seems more reasonable.

How Business Owners Can Use the Decoy Effect

Business owners can leverage the Decoy Effect to increase conversions or sales in the following ways:

  1. Offer Choices with Significant Price Differences:
  2. A noticeable price difference between two main products can nudge customers toward the option more beneficial to the business.
  3. Understand Consumer Preferences:
  4. Identify what holds the most value for your audience and arrange options so that they feel they are getting more by choosing the desired product or service.
  5. Use Effective Comparisons:
  6. A comparative option that is not too bad or too good will be more effective in steering consumers toward the more advantageous product.

Implementing the Decoy Effect requires careful selection, presentation, and offering of choices. Businesses can increase conversion rates without significantly changing their products or prices. However, it’s essential to remember that while this effect can boost sales, companies must apply it cautiously to avoid making consumers feel misled or forced into selecting an undesired option.