Decoy Effect
What Is the Decoy Effect in Simple Terms?
The decoy effect is a decision-making bias in which adding a third, deliberately less appealing option changes how people choose between two existing ones.
The new option isn't meant to be chosen, it exists to make one of the original choices look better by comparison.
The Decoy Effect in Real Life
A common example involves popcorn sizes at a cinema. Suppose a small costs $3 and a large costs $9.
On its own, many people would hesitate to choose the large option. But once a medium is introduced at $8, the large suddenly looks like a bargain.
For just $1 more than the medium, you get significantly more popcorn. The medium option acts as a decoy. Its purpose isn't to sell, it's there to make the large option look like a great deal by comparison.
Small for $3, Medium for $8 or Large for $9?
The same logic shapes coffee-shop menus, subscription tiers, phone plans, and housing options, quietly steering buyers toward the choice a seller most wants them to make.
Conclusion
When an additional, intentionally less appealing option is introduced, it makes the other options appear more attractive without improving the original offer itself.
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