The Decoy Effect: Pricing Using Alternatives

Psychological Pricing
Knowledge Center

Psychological Pricing > Forum

New Topic

Business Consultant, United Arab Emirates
🔥NEW While lining up at a movie theatre to buy some popcorn you are feeling very hungry. So you intend to buy a medium-sized bag of popcorn. But when you get to the counter, you see a small one costs $4; the medium is $7.50; and the large is $8. You don't really need a whole large popcorn, but you end up buying it anyway, because it's a much better deal than the medium. This is what is known with the Decoy Effect. it is an interesting cognitive illusion in the way we make decisions and stands as an example of irrational decision making. 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. In simple terms, when deciding between two options, an unattractive third (middle) option can change the perceived preference between the other two, typically in favor of the more expensive one. By introducing a third unpopular option, the decoy effect can ca (...) Read more? Sign up for free


More on Psychological Pricing
The Decoy Effect: Pricing Using Alternatives
The Importance of Price Stereotypes for the Price Image in Consumer Products
Pioneer Pricing vs. Psychological Pricing
Is this Psychological Pricing?
Special Interest Group

Are you interested in Psychological Pricing? Sign up for free

Notify your students

Copy this into your study materials:

and add a hyperlink to:

Link to this discussion

Copy this HTML code to your web site:

Psychological Pricing
Knowledge Center


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2021 12manage - The Executive Fast Track. V15.7 - Last updated: 22-1-2021. All names of their owners.