Th Decoy Effect

Melanie Pandocchi

September 28, 2014

Irrational Economics

Reflection Paper #1

Before reading this chapter, I had never heard of the idea of having a decoy option for something. The decoy is option that is slightly less appealing so that you choose the option that is supposedly the best for the consumer. The decoy effect is when you choose that option that is supposedly better instead of the less appealing option. I honestly believe that Ariely did a fantastic job, even if I did not fully comprehend the concept at the time, of explaining what the decoy effect was to the reader. Since I obviously didn't entirely understand the concept, I conducted a secondary Google search and found the following definition of the decoy effect. The search told me that the decoy effect is "the phenomenon whereby consumers will tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated".

English: The headquarters of Netflix in Los Gatos.

English: Melanie Safka in Charlotte, North Carolin...

Dan Ariely speaking at TED

One place where he accomplished this was when he discussed the advertisement for the three options for the Economist subscription. There was an option for print only, an option for web only, and an option for both that was the same price as the print only option. He pointed out that the print only option would be the decoy. Due to the decoy effect which is when a person's preference changes with the inclusion of a third, less desirable option, most people would choose the option that included both the print and the web components instead of just one option. Ariely also stated that when he took away the print only option when presenting his experiment to his students, the majority of the students chose to subscribe to the web only option because it was the cheaper, more sensible...