Why the Brain Buys What It Doesn’t Want

Picture this: You’re at the movie theater concession stand loading up on snacks. You have a choice of a small, medium, or large soda. The small is $3.50 and the large is $5.50. It’s a tough decision: the small size may not last you through the whole movie, but $5.50 for some sugar and carbonation seems ridiculous. But there’s a third option, a medium soda for $5.25. Medium may be the perfect amount of soda for you, but the large is only a quarter more. If you’re like most people, you end up buying the large (and taking a bathroom break mid-show). 

If you’re wondering who would buy the medium soda, the answer is almost no one. In fact, there’s a good chance that the marketing department inadvertently priced the medium soda as a decoy, making you more likely to buy the large soda rather than the small. 

I have written about this quirk in human nature before with my friend Dan Ariely, who studied this phenomenon extensively after noticing pricing for subscriptions to The Economist. The digital subscription was $59, the print subscription was $125, and the print plus digital subscription was also $125. No one in their right mind would buy the print subscription when you could get digital as well for the same price, so why was it even an option? Ariely ran an experiment and found that if only the two “real” choices were offered, more people chose the less expensive digital subscription. But the addition of the bad option made people much more likely to choose the more expensive print plus digital option. 

Brain scientists call this quirk “asymmetric dominance” and it means that people gravitate toward the choice nearest a clearly inferior option. Marketing professors call it the decoy effect, which is certainly easier to remember. Lucky for us consumers, almost no one in the business community understands it.

The decoy effect works because of the way our brains assign value when making choices. Value is almost never absolute; rather, we decide an object’s value relative to our other choices. If more options are introduced, the value equation changes. 

Asymmetric dominance is a particularly fascinating phenomenon when you strip it down to its simplest form: As odd as this sounds, if someone is equally likely to purchase an apple or an orange, and then you add a third option of an apple with a worm hole in it, people choose the good apple to buy, over both the wormy apple and the orange. This example is both irrational and disgusting, but the idea has been proven in both labs and kitchens. It is one of the weirdest and most powerful effects I have seen, and it works brilliantly. It is the reason marketers almost always stumble into a three-choice set of options, often having no clue why three choices sell better than four or any other number. 

The decoy effect doesn’t just fool humans. It’s been found to work for other animals as well, including single-celled amoeba. When given the choice of great food (caviar?) in an undesirable environment versus mediocre food in a great environment, amoebas choose each option equally. But if you add in the choice of bad food in a great environment, a decoy choice, the amoebas overwhelmingly choose mediocre food in the great environment. The decoy helps us (and amoebas) simplify the factors we have to balance. It makes one choice clearly better than another in situations where previously there was no best choice. 

The implications extend far past food choices and magazine subscriptions. Third party political candidates can throw elections, not just because they split the vote, but because a third option changes the way we make decisions. Dan and I predicted that Hillary Clinton could end up losing the 2008 primary against Barack Obama because she made her ticket into an inferior option when she suggested Obama as a potential vice president. Clinton created a superior option that never materialized, while leaving her independent candidacy inferior to Obama’s, who had not chosen a running mate.  

Whether or not that cost Clinton the election is hard to know, but Ariely has even applied the phenomenon to dating. He took the faces of two men considered different but equally attractive and asked women who they would choose to date. About half the women chose each man. But then he manipulated photos to add a third decoy option: a less attractive version of one of the men. By now you can guess what happened: more women chose the more attractive version of the man who had been photo shopped. The moral of that story is to always hang out with someone who looks similar but slightly less attractive.

The decoy effect tells us a lot about how our brains work; namely, we naturally take shortcuts by making relative value judgments. These shortcuts make us quicker at making decisions, but they also make us vulnerable to decoys.

Note: A version of this article was first published in USA Today, but because of the importance of the subject matter, we felt it was worth including on Linkedin, where we tend to get more feedback and a lively discussion.