Imagine you’re lining up at a movie theatre to buy some popcorn. You’re pretty hungry, so you think you’ll get a medium-sized bag. When you get to the concession stand, you see the small costs $4; the medium is $6.50, but the large is $7 – just .50 more. You don’t really need a whole large popcorn, but you end up buying it anyway, because it’s a much better deal than the medium.
That is a prime example of asymmetric dominance in action. Asymmetric dominance, also known as the decoy effect, is a cognitive bias in decision-making where the presence of a third option (the "decoy") makes one of the other two options more attractive, even though the decoy itself is not an ideal choice. The decoy is designed to be asymmetrically dominated by one of the other options, meaning it's inferior to that option in every way but still better than the other option. This manipulation nudges people to make a choice they might not otherwise have made.
The decoy influences how the other two options are perceived. By adding a third choice that is clearly worse than one of the other options but similar to the other in some way, consumers will often favor the better option (the one it asymmetrically dominates). The decoy makes the dominant option look more attractive in comparison.
The decoy effect works partly through anchoring, where the decoy acts as a reference point that makes one of the original choices appear better. The decision-maker is anchored to the decoy's characteristics, and it becomes a standard against which the other options are judged. The asymmetry between the decoy and the more attractive option strengthens the preference for the better choice.
In hisTED Talk, behavioral economist Dan Ariely explains the "decoy effect" using an old Economist advertisement as an example. When only two subscription options are offered, more people chose the lower priced online only subscription. But when the decoy is added to the mix, the numbers flipped. More people opted for the more expensive option.
The Decoy Effect impacts our everyday decisions; what trade-offs we’re willing to make and how these change based on a decoy.
In another study, people were asked to choose a restaurant based upon the criteria of quality and convenience.
GROUP 1: The first group was asked to choose between:
A. an expensive restaurant that was a 35-minute drive away,
B. an average priced restaurant that was less than 10 minutes away.
In this group, there is no decoy. The choice of quality vs convenience is largely dependent on personal preference. A foodie would likely be happy to make the drive for a 5-star meal, while someone else might be just as happy with the more convenient meal.
GROUP 2: The second group had the same two options PLUS a decoy. In this case, the decoy was a slightly worse option than the target – the high-dollar restaurant. More people chose that restaurant because the decoy shifted the focus to quality.
GROUP 3: In the third group the decoy, was added to make option B the target. By drawing more attention to the convenience factor, and being inferior to the target, the decoy caused more people chose the lower priced restaurant.
Spot on, Mel, as usual. I remember a column someone fabulous wrote about why facts don't matter. 😆 So how can we dodge the decoy effect. Knowing about it, I suggest, is not sufficient. Is there a 'dodge trick' to help us not get caught?