The Decoy Effect: 9 Examples and How to Use It on Your Store

The decoy effect is what happens when adding a third option changes which of the other two people pick. The third option, the decoy, is slightly worse than one of them in an obvious way. That makes its better neighbour look like the clear winner, and more people choose it.

Researchers call it the asymmetric dominance effect or the attraction effect. Store owners usually meet it as "decoy pricing": a medium popcorn that costs nearly as much as a large, or a bundle that makes the single item look poor value.

This page has 9 decoy effect examples, from lab studies to a grocery shelf and an online jewellery store. It also covers the cases where decoys don't work, which most articles skip, and how to set one up honestly. It's part of our guide to ecommerce psychology.

How the decoy effect works

You need three options:

• The target: the option you want people to choose.
• The competitor: a real alternative that's better in a different way, usually cheaper.
• The decoy: an option that looks like the target but is clearly worse. Same price with less in it, or nearly the same price with much less in it.

Most people don't pick the decoy. That's fine. Its job is to make the target easy to justify. Choosing between the target and the competitor is hard, because each wins on something. Choosing between the target and the decoy is easy. So the target picks up a "win" that the competitor doesn't have.

The decoy effect overlaps with anchoring bias, where the first number you see sets the scale for the rest. A decoy often works as an anchor too.

Decoy effect examples

1. The Economist subscription

This is the example everyone uses, and for good reason. Dan Ariely described it in his book Predictably Irrational and his 2008 TED talk. The Economist had run an offer with three choices. Ariely tested it on two groups of 100 MIT students.

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Nobody wanted print only. Why would they, when print and web cost the same? But having it there made print and web look like a free upgrade. Take it away and most students went for the cheap web option.

What it means for a store: a decoy doesn't need to sell. It just needs to make your target look like a no-brainer by comparison.

A note on the source: Ariely's work has faced questions since 2021, when a 2012 paper he co-authored was retracted over problems with its data. The Economist test wasn't part of that, but it was a classroom test, not a published field study.

2. Huber, Payne and Puto's original study

The effect was first shown by Joel Huber, John Payne and Christopher Puto in the Journal of Consumer Research in 1982. Their paper was a test of a basic rule in economics called regularity: adding a new option should never increase the share of an option that already exists.

They found it could. When they added an option that was worse than one choice but not the other, the choice it was worse than gained share. That broke the rule, and it started decades of research into how context changes what people choose.

What it means for a store: your customers don't judge products one at a time. They judge them against whatever's next to them on the page.

3. Rome with coffee, Rome without coffee

In the same TED talk, Ariely described a choice between a free weekend in Rome or a free weekend in Paris. That's a hard choice. Then he added a third option: Rome without the free morning coffee.

Nobody wants Rome without coffee. But in his words, "The moment you add Rome without coffee, Rome with coffee becomes more popular, and people choose it."

What it means for a store: the decoy can differ by something small. A missing extra, like a free gift or a warranty, is enough to make the full version stand out.

4. Tom and Jerry's photos

Ariely ran the same idea with people. Participants chose between photos of two men, Tom and Jerry. Some participants also saw a slightly less attractive version of Jerry. Others saw a slightly less attractive version of Tom.

Whichever man had a weaker double next to him got picked more often. As Ariely put it: "When ugly Jerry was around, Jerry was popular."

What it means for a store: it isn't only about price. A decoy can be a weaker version of any feature: smaller size, fewer colours, shorter guarantee.

5. Baked beans in a UK grocery store

Most decoy studies happen in labs. John Doyle and colleagues took it into a real grocery store in the UK and published the results in Psychology & Marketing in 1999.

Their target was the least-bought brand of baked beans on the shelf, a low-priced one. The researchers added a smaller can of those same beans, priced the same as the larger can. Nobody sensible buys the smaller can at that price. But its presence made the bigger cheap can look like better value, and its sales rose.

What it means for a store: the simplest decoy in ecommerce is a smaller pack at nearly the same price. If you sell a 250g and a 500g bag, the gap between their prices decides which one looks like the deal.

6. The sold-out decoy

Doyle's team then went a step further. They took the smaller cans off the shelf and left only the price sign. The decoy couldn't be bought at all. Shoppers saw the sign, and sales of the low-priced beans still went up.

Researchers call this a phantom decoy. It's relevant to any store with variants, because a sold-out option still sits on your product page, and still shapes how people see the ones that are left. It sits close to scarcity marketing, where limited availability changes how people value what's left.

What it means for a store: look at what your sold-out variants are saying. A sold-out large next to an in-stock medium makes the medium look like the one to grab. But don't list options you never intend to stock. That's a fake option, not a decoy.

7. An online diamond store

This is the closest study to how most of our readers sell. Chunhua Wu and Koray Cosguner analysed real sales data from a large online diamond retailer, published in Marketing Science in 2020. Diamonds are a good test, because two stones can be almost identical except for one grade and the price.

Shoppers didn't spot decoys often. The chance of seeing a decoy next to the diamond that beat it was only 11% to 25%. But when they did, the better diamond was 1.8 to 3.2 times more likely to sell. The researchers estimate the decoy effect raised the retailer's gross profit by 14.3%.

What it means for a store: decoys only work when shoppers can see the comparison. A decoy on page four of a collection does nothing. Put it right next to the target.

8. The Williams-Sonoma bread maker

This one is told in persuasion books, including Steve Martin's Yes! 50 Secrets from the Science of Persuasion and William Poundstone's Priceless. Williams-Sonoma sold a home bread maker. Then it added a newer, much pricier model, often reported at $429. The new one barely sold. But within a few weeks, sales of the original, cheaper machine had almost doubled.

Strictly, this is the compromise effect, a close relative of the decoy effect. People avoid the extremes and drift to the middle, or to the option that now looks modest. It's an anecdote rather than a published study, but it matches what the research predicts.

What it means for a store: adding a premium option can sell more of your standard one. You don't need the premium one to sell well for it to pay off.

9. Cinema popcorn sizes

You've probably bought this decoy. A typical cinema menu reads something like: small $5, medium $8, large $9. Those prices are illustrative, but the pattern is everywhere. The medium is so close to the large in price that the large looks like the only sensible choice, and that's the one the cinema wanted to sell.

What it means for a store: in a set of three sizes or bundles, the middle one is your lever. Price it close to the top option to push people up. Price it well below to keep people in the middle.

When the decoy effect doesn't work

Most articles on decoy pricing stop at the examples. The research is less tidy.

In 2014, the Journal of Marketing Research published two papers that tried to reproduce the effect at scale. Sybil Yang and Michael Lynn ran 91 attempts across 23 product types and found reliable decoy effects in only 11. Shane Frederick, Leonard Lee and Ernest Baskin reported that the effect showed up "when stimuli are represented numerically, but not otherwise." In other words, it held when options were laid out as numbers, and often disappeared with pictures or descriptions.

Huber, Payne and Puto replied in the same issue. They agreed the effect has limits, and listed when it weakens:

• People already know what they want.
• The decoy isn't obviously worse, so the comparison takes effort.
• Different shoppers value the features very differently.
• The decoy is so unappealing it puts people off, or so appealing that people buy it.

Their conclusion was that "the attraction effect does replicate," and that it's strongest when people are working out what they want on the spot.

For a store, that's useful. Decoys work best on products people don't buy often, where the options differ on clear numbers like size, quantity or price. They do little for a loyal customer who always buys the same thing.

How to use a decoy on your store

1. Pick the target first. Usually your best-margin bundle or size, not the most expensive one.
2. Make the decoy similar to the target and clearly worse. Same price for less, or almost the same price for much less. The comparison should take two seconds.
3. Put them side by side. Same page, same row, same format. In example 7, most shoppers never noticed the decoy at all.
4. Use numbers. Sizes, quantities, prices per unit. The research says this is where decoys hold up.
5. Make the decoy real. It has to be a product you'll actually sell at that price, and be happy selling. A fake option isn't a decoy, it's a misleading listing.
6. Test it. Watch how the share of each option changes over a few weeks. If the decoy starts selling heavily, it isn't a decoy anymore. Reprice it.

The same thinking applies to subscription tiers. If you sell plans, the gap between the middle and top plan decides where most people land.

A decoy makes the target look good on paper. Shoppers still want to know other people bought it. Social proof answers that. A recent sales notification from Nudgify can show real orders for the bundle you want to sell, so the comparison and the proof point the same way. There's a free plan, and paid plans start at $9 a month with a 7-day trial. See Nudgify pricing.

Decoy effect FAQ

What is the decoy effect?

The decoy effect is when adding a third option changes how people choose between two others. The decoy is similar to one option but clearly worse, so that option looks like the obvious pick. Researchers call it the asymmetric dominance effect or the attraction effect. It was first shown by Huber, Payne and Puto in 1982.

What is a real example of the decoy effect?

The best known is The Economist subscription offer Dan Ariely tested: web only for $59, print only for $125, or print and web for $125. Nobody chose print only, but its presence pushed most people to the $125 bundle. Without it, most chose the $59 web option.

Does the decoy effect work in real shops?

Sometimes. A 2020 study of an online diamond retailer found that when shoppers noticed a decoy, the better diamond was 1.8 to 3.2 times more likely to sell, adding 14.3% to gross profit. But other studies found decoys often fail when products are described in words or pictures instead of numbers, or when people already know what they want.

Is using a decoy price unethical?

Not if the decoy is a real product you'll actually sell at the stated price. A decoy just makes a comparison easier. It becomes deceptive when the option is fake, can't be bought, or hides costs. If you'd be unhappy to sell the decoy, don't list it.