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.

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.