The Decoy Effect

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Adding a worthless option could increase your sales.

Take this study¹ from the University of Liechtenstein. The researchers showed a representative sample of readers these two book choices:

The vast majority of people decided to buy the $10 e-book rather than both the e-book and the hardcover.

However, the researchers then tested adding a third decoy option.

This option was pointless, offering just the hardcover for $20, yet it altered behaviour.

Now, the least popular option has become the most popular.

According to Bas Wouters², the researchers were also able to calculate that sales would increase by 10% if they added this unattractive option in real life.

Dan Ariely³ replicated this finding with his real-world study. Working with The Economist, he persuaded the majority of readers to choose the more expensive $125 Print & Web Subscription by adding a decoy Print-Only Subscription.

Hilariously, the decoy effect doesn't only boost sales.

In Predictably Irrational, Dan Ariely compared the attractiveness of two men: Tom and Jerry.

If Jerry's ugly brother was pictured next to Jerry, Tom became more attractive.

If he were pictured next to Tom, Jerry would be seen as more attractive.

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Our surroundings always anchor us.

So, if you want to make your preferred choice seem more attractive, add a decoy option at the same price.

That's all for now — Phill​

P.S. Did you enjoy this newsletter? Please forward it on. I spent hours researching the decoy effect and would love for more marketers to be aware of this principle.