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decoy_effect
The decoy effect occurs when the introduction of a third option (the decoy) changes the preference between two original options. The decoy is asymmetrically dominated - it is inferior to one option (the target) in all respects but only inferior to the other option (the competitor) in some respects. Its presence makes the target appear more attractive by comparison.
A magazine offers three subscription options: online-only for $59, print-only for $125, and print + online for $125. The print-only option (the decoy) makes the print + online option look like an exceptional deal, dramatically increasing its selection rate.
A coffee shop offers a small cup for $3.00, a medium for $4.50, and a large for $4.75. The medium acts as a decoy, making the large seem like an obvious bargain, and the vast majority of customers who see all three options choose the large.
A streaming service presents three plans: Basic for $8/month, Standard for $15/month, and Premium for $16/month. The Standard tier is the decoy — it nudges most subscribers toward Premium, which feels like almost the same price for significantly more features.
Binary (yes/no) questions an LLM must answer to identify this aspect:
Is a clearly inferior option presented alongside the preferred choice?
Type: binaryDoes the comparison set include an option that exists primarily to make another look better?
Type: binaryWould the preference change if the third option were removed?
Type: binaryThe decoy effect occurs when the introduction of a third option (the decoy) changes the preference between two original options. The decoy is asymmetrically dominated - it is inferior to one option (the target) in all respects but only inferior to the other option (the competitor) in some respects. Its presence makes the target appear more attractive by comparison.
The decoy provides an easy comparison that makes the target option seem clearly superior to at least one alternative, simplifying the decision. People avoid the cognitively harder comparison between dissimilar options in favor of the easy dominance comparison.
When choosing among options, temporarily remove each option to see if your preference between the remaining ones changes. If it does, a decoy may be influencing your judgment.
Pricing strategies across industries routinely include decoy options: restaurant menus feature extremely expensive items to make moderately expensive ones seem reasonable, and software companies offer 'professional' tiers designed to push customers toward 'enterprise' plans.
Use these tools to detect, analyze, or train this aspect.