Adding an unattractive third option makes a high prize look reasonable.
Maybe you have already heard about the magic effects of adding a ‘Medium’ size. It makes the ‘Small’ look a little too cheap to order. Many not so thirsty people who would usually have chosen the smallest one out of two, rather pick the middle size when it’s available. Especially when they are being watched by others. But the ‘Medium’ size can do even more. If it is positioned strategically close to the Large option, it even makes the most expensive option look like a fairer deal.
An example to make you see the effect: Imagine two bottles of Coke being offered for either 1 or 3 euro’s. Many people would choose the smaller one, because it saves them 2 euro’s. But marketeers found a way to make the larger option seem more attractive. They simply add a third size which resembles the larger one, but is obviously a worse option. It could be a bottle that is way smaller than the 3 euro one, but costs only 50 cents less. Now, compared to the weird 2,50 option, the 3 euro bottle suddenly seems a profitable offer.
In many experiments, the trick has already been proved to work. Not only for simple products in the supermarket, but also when choosing a workplace. It is called the decoy effect, the attraction effect or the asymetrically dominated alternative effect, in which the third alternative or ‘decoy’ (the 2,50 bottle), is being ‘dominated’ by the ‘target’ (the 3 euro bottle).
Why does our brain work like that? A creative mind can find a lot of possible explanations, all of which may be a little true. But the decoy effect seems to depend at least a little bit on the need to justify a decision to others, recent experiments of Connolly et al. show. They examinated which conditions diminish or enhance the decoy effect on subjects.
Their results yet again confirm the decoy effect, but on top, they show that warning participants about the future can make them choose differently. If they are told they have to justify their decision to others, they are even more likely to be stirred by the decoy in the direction of the target. But if they were warned about possible regrets, the decoy effect fades out. Even just priming subjects with regret made them more resistant to the decoy effect.
So what seems to convince a random shopper to buy the 3 euro bottle if it is standing next to the 1 euro bottle ánd the 2,5 euro bottle? It offers him an extra argument to defend his choice to others: ‘I picked the one that was a far better option than another’. But if he is really true to himself, Connolly et al. conclude, he actually doesn’t fall for it.
Terry Connolly, & Jochen Reb Edgar E. Kausel (2013). Regret salience and accountability in the decoy effect Judgment and Decision Making
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