Decoy Effect (Asymmetric Dominance)

A pricing and choice architecture phenomenon where introducing a clearly inferior third option (the decoy) shifts preference between the original two options. Small coffee $3, Large coffee $7: people split evenly. Add Medium coffee $6.50 (the decoy—almost as expensive as Large but much less coffee): suddenly most people choose Large, because it looks like a great deal RELATIVE TO THE DECOY. The decoy is never chosen itself—it exists only to make the target option look superior by comparison. The Economist famously offered: digital-only $59, print-only $125, print+digital $125. Nobody chose print-only, but its presence made print+digital look like an incredible deal.

When to use it

When pricing strategy needs to nudge customers toward a preferred option; when presenting proposals with multiple options and want to guide selection; when analyzing competitor pricing structures for decoy dynamics; when evaluating your own choices and want to check for decoy influence.

How it can help

In pricing and product design: create options that make your preferred option look superior by comparison. The decoy should be close in price to the target but clearly inferior in value. In presentations: when proposing three options, design the middle option to make the one you recommend look strongest. Defensively: when evaluating options, remove the decoy (the obviously inferior choice) and evaluate the remaining options on their own merits. If your preference changes after removing an option you'd never choose, the decoy was working on you.