Epi #24: Unravelling the Decoy Effect ~ the Silent Puppeteer of Consumer Choices

Introduction

Imagine: you're in a bustling café, the aroma of freshly brewed coffee enveloping the air, a menu in hand. The regular-sized coffee is your go-to, but today, the large is beckoning. Just as you're about to decide, a grandé option catches your eye—extravagant and frankly, unnecessary. Oddly, the grandé’s presence makes the large not only palatable but a bargain! This cognitive dance, is orchestrated by the Decoy Effect, a phenomenon subtly guiding our choices. But how does this silent puppeteer weave its magic? Let’s uncover the elaborate dance of cognitive illusions, emotional instincts, and evolutionary traits steering our decision-making.

The decoy effect is referred as the phenomenon whereby consumers shift their preference between two options when presented with a third option – the “decoy” – that is “asymmetrically dominated”.

The Cognitive Psychology Underpinning The Decoy Effect

In the complex theatre of our minds, the Decoy Effect originates from the enigmatic world of cognitive psychology. We are comparative thinkers, meticulously evaluating options relative to the surrounding alternatives. Each choice is a harmonious dance of rational assessments entwined with emotional influences.

Pioneering studies, like those conducted at the esteemed University of Oxford, have dived deep into this multifaceted dance, unveiling a world where a strategically placed decoy skews our mental balance, rendering one of the primary options supremely attractive.

The Neurobiological Ballet

Our brain, nature’s masterpiece, orchestrates this intricate dance of choices. The ventromedial prefrontal cortex, our grand conductor, assesses rewards whilst the graceful amygdala processes our swirling emotions. A decoy, stepping into this neurological dance, initiates complex calculations, drawing us towards the option glittering with emotional satisfaction and perceived value.

An interactive visualisation embedded in the blog offers readers an immersive insight into the neurological spectacle igniting during decision-making.

Evolutionary Backdrop

Cast your mind to the era where our ancestors traversed vast landscapes. Their survival relied on swift, comparative assessments—a dance rooted in the principle of energy conservation. This ancient rhythm has transcended time, with the Decoy Effect echoing the swift assessments and choices of our forebears.

The Hidden Herd Mentality

Our social fabric is interwoven with collective behaviours, playing a pivotal role. The Decoy Effect doesn’t merely sway individual choices—it shapes the collective heartbeat of consumer behaviour. It’s akin to an unspoken agreement in a crowded room, a silent consensus directing the masses towards a distinct choice—echoing our evolutionary quest for safety in numbers.

Practical Applications and Techniques

1. The Art of Pricing: In cinemas, the Decoy Effect is a star performer. A small popcorn for $3, a medium for $6.50, and a large for a mere $7—the medium, the decoy, makes the large an irresistible spectacle, leading audiences into the arms of this cognitive bias.

2. The Symphony of Product Bundling: In digital realms, software firms bundle less popular offerings with star products, a move choreographed by the Decoy Effect, turning the bundle into an allure of value.

3. The Rhythm of Menu Design: Restaurants play this symphony too. A high-priced vino beside moderately priced options turns the latter into an anthem of value and desirability.

How Apple Uses Decoy Effect

Look at the Apple presentation, which illustrates more real-world applications of the Decoy Effect. If someone is thinking of buying an iPhone 8, then the existence of the iPhone X makes him/her more likely to buy the iPhone 8 Plus—even though in no case would you buy the iPhone X. Simply by adding a more expensive decoy, Apple has?raised?the average price paid for?any?iPhone from $694 to $796—not only by introducing a more expensive model, but by making the previous most expensive model the new midpoint.

This Decoy pricing strategy works best when there are:

1. Target- It's a choice that someone else wants you to make
2. Competitor - It's an option against the target
3. Decoy - When it's present, changes your decision from the competitor to the target.

In nutshell, Apple's pricing strategies bend your mind into thinking their products are a good deal.

In Closing

As we close the curtains on this illuminating exploration, the Decoy Effect stands centre stage—an enigmatic dancer influencing our choices. For marketers, unravelling this dance is mastering the subtle art of influence. For consumers, it’s an awakening, where each choice is a step in a dance echoing both ancient and contemporary rhythms.

But as we untangle the threads of consumer behaviour and business strategy, a partner in this dance is essential—a BeSci-led strategist who not only observes but anticipates, adapts, and accentuates each movement.

About the Author: Nicholas Mason | B.Soc.Sc., BBehSc

Stepping into the captivating realm of cognitive psychology led me to discover my passion for Behavioural Science. Its profound insights into human behaviour, coupled with the synergy of AI technologies, have the potential to revolutionise marketing strategies.

I've honed my craft by immersing myself in the intricacies of human decision-making, leveraging BeSci principles to navigate the complex dance of consumer choices and business outcomes. Every interaction, campaign, and strategy is an opportunity to orchestrate a masterpiece of influence, engagement, and growth.

Much like catching the perfect wave while surfing, identifying and riding the trends at the right time is essential in business.

If you're intrigued by the Decoy Effect and ponder how such insights could shape your own business landscape, I invite you to embark on a collaborative journey. Together, we'll harness the power of Behavioural Science, navigating the intricate dance of consumer psychology to elevate your brand’s resonance and impact.

Let's not just observe the dance; let's lead it.

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In this call to action, I've aimed for a gentle but compelling invitation for readers to consider the value of having a BeSci-led strategist like yourself on their team, tying it elegantly with the thematic essence of your article.

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