Series Vol. 13 , 13 September 2023
* Author to whom correspondence should be addressed.
Behavioral economics blends psychology and economics to determine how psychological triggers or nudges influence people's decision-making. The decoy effect has been a particular focus of study in the behavioral economics literature. The decoy effect is seen as an effective "Nudge" and is widely used by businesses. For example, magazine subscriptions, vacation destination choices, and sales of various products—where there is a choice, there is an arena for nudges. The marketplace is flooded with nudges to influence consumer choice; in everyday consumption, many businesses use the decoy effect to maximize sales of specific products or options to increase revenue. Based on a review of the relevant literature and practical case applications of the decoy effect, this study summarizes articles with similar conclusions which can support each other while also mentioning different views regarding the limitations and disagreements of the decoy effect in behavioral economics. However, in general, the effects carried by decoys are apparent and have been confirmed by a large amount of literature.
decoy effect, attraction effect, asymmetrically dominated, market strategy, behavioral economics
1. Huber, J, J W Payne, C Puto. 1982. Adding asymmetrically dominated alternatives: Violations of regularity and the similarity hypothesis. Journal of consumer research 9(1) 90–98.
2. Jeong, Y., Oh, S., Kang, Y., & Kim, S. (2021). Impacts of Visualizations on Decoy Effects. International Journal of Environmental Research and Public Health, 18(23).
3. Bateman, I. J., Munro, A., & Poe, G. L. (2008). Decoy effects in choice experiments and contingent valuation: Asymmetric dominance. Land Economics, 84(1), 115-127.
4. Grasset, G. (2015). Decoy Pricing Definition. https://www.lokad.com/decoy-pricing-definition#Compromise_Effect_0.
5. Parrish, A. E., Evans, T. A., & Beran, M. J. (2015). Rhesus macaques (Macaca mulatta) exhibit the decoy effect in a perceptual discrimination task. Attention, Perception, & Psychophysics, 77(5), 1715–1725.
6. Alibabu, & Omprasad Reddy. (2018). PRICING STRATEGIES IN BUSINESS. International Journal of Logistics & Supply Chain Management Perspectives, 7(01), 3302-3306.
7. Khan, Uzma, Meng Zhu, Ajay Kalra. 2011. When Trade-Offs Matter: The Effect of Choice Construal on Context Effects. Journal of Marketing Research 48(1) 62–71.
8. Frederick, Shane, Leonard Lee, Ernest Baskin. 2014. The limits of attraction. Journal of Marketing Research 51(4) 487–507.
9. Park, J., & Kim, J. (2005). The Effects of Decoys on Preference Shifts: The Role of Attractiveness and Providing Justification. Journal Of Consumer Psychology, 15(2), 94-107.
10. Hu, J., & Yu, R. (2014). The neural correlates of the decoy effect in decisions. Frontiers In Behavioral Neuroscience, 8.271.10.3389/fnbeh.2014.00271.
11. Yang, Sybil, Michael Lynn. 2014. More evidence challenging the robustness and usefulness of the attraction effect. Journal of Marketing Research 51(4) 508–513.
12. Wu, Chunhua & Cosguner, Koray. (2020). Profiting from the Decoy Effect: A Case Study of an Online Diamond Retailer. Marketing Science. 39. 974-995.
13. Ariely, D. Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions, 1st ed.; Harper Perennial: London, UK, 2010.
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.