Birds Do It, Bees Do It, Even Amoebas Do It: Understanding the Decoy Effect

Do you know how much a bridge costs? I didn’t. That is until Hurricane Helene washed away our steel-reinforced concrete bridge as though it were made of Lincoln Logs. I currently have to ford a creek in my car to get to the street. The first quote we got for replacing the bridge was $40,000. That sounded insane to me, but as I mentioned, I had no idea what the going price for a bridge should be. The second quote we got was $120,000. Suddenly, a $40,000 bridge seemed like the deal of the century.

We, as humans (and as animals in general, as we’ll learn), have a very difficult time assessing something without being able to compare it to something else. It’s why before-and-after photos are so effective. It’s why comparison charts are so useful. And it’s why every time I go through a drive-through with my kids I wince and say, “When I was little, I could’ve gotten that for less than three dollars.”

This need to compare options, however, makes us susceptible to cognitive biases. We can be easily manipulated into certain choices based solely on how information is presented. You didn’t think we were going to go the whole year without talking about cognitive biases in sales, did you? May I present to you: the decoy effect.

WAIT A MINUTE, THAT’S NOT A DUCK

In hunting, a decoy is something used to attract birds or mammals so that you can capture them. In sales, a decoy is the exact same thing, just with fewer birds. The “decoy effect” describes how, when someone is picking between two choices, adding a third, less appealing alternative can change their perception of the original two options.

The quintessential example of the decoy effect is movie popcorn. Imagine you’re at the theater and buying popcorn before the show. You can get a small popcorn for $3 or a large popcorn for $7. You’re not that hungry, and you already paid more than you think is appropriate for the movie (because when you were little…), so you opt for the small popcorn.

Now, imagine you go to the movies and want some popcorn, but now there are three choices. A small for $3, a medium for $6.50, or a large for $7. Look how much more popcorn you can get for only 50 cents! How can you pass up this deal? You opt for the large.

In this scenario, the large popcorn is the “target.” That’s the one the theater wants you to buy. The “decoy” is the middle option for $6.50. In this case it can be purchased, but the theater won’t care if they never sell a medium popcorn. Its purpose is simply to make the target choice more attractive. In some cases, as in hunting, the decoy isn’t even real.

DECOYS ARE EVERYWHERE (EXCEPT WHEN THEY’RE GHOSTS)

The decoy effect is happening all over the place. It’s effective for small purchases like popcorn and large purchases like engagement rings. It can impact non-consequential decisions like which beer you decide to drink, and more serious decisions like who you decide to go on a date with. It can make you spend more or make you spend less. It can make me eat an entire large popcorn by myself.

Let’s take a look at another example so we can see just how versatile the decoy effect can be. Let’s say you’re buying a bottle of wine. Choice A is $14 and has a quality rating of 50. Choice B is $25 and has a quality rating of 70. Which do you choose? Do you value quality over expense? Honestly, I don’t care which one you pick, but maybe the shop owner does.

The shop owner made a mistake in ordering and has a lot of choice A wine that she needs to get off of her shelves. She doesn’t want to lose money by discounting it, so instead, she offers a third choice alongside the others—choice C costs $14 a bottle and has a quality rating of 20. Now when you’re in the shop you think, “Wow, these two wines are the same price, but this one is much higher in quality.” Suddenly choice A is flying off the shelves.

The shop owner’s plan worked a bit too well, and now she needs to sell more of the $25 bottle. Decoy effect to the rescue again. She gets rid of choice C (she only had a few bottles of it since it was her decoy). Now, she introduces choice D. The choice D wine is $25 (just like choice B), has a quality rating of 80 (10 points higher than choice B), but—get this—is currently out of stock. Now you come in, want choice D but can’t have it, so you buy the next best thing for the same price. You were just manipulated by a fake bottle of wine! That’s what’s called a “phantom decoy.” Ducks don’t seem so stupid anymore, do they?

TO ERR IS HUMMINGBIRD

Now that you know about the decoy effect, you’ll be able to avoid falling into its trap, right? Don’t be so sure. The decoy effect works so well because it taps into some of our most basic instincts. A 2021 study exploring the decoy effect and risk aversion explained it this way.

Multiple behavioral experiments have consistently demonstrated that greater choice hinders decision-making, as consumers face greater anxiety over making the correct choice. In an attempt to reduce this anxiety, consumers tend to compare the given options on only a few criteria—most often price, quantity, and quality—to make the best decision that maximizes their utility. A decoy, therefore, manipulates consumers into acting in a way that leads them to believe they are making a rational, informed choice based on the perceived qualities of the given options.

Choice is stressful. Which criteria should we be analyzing? The decoy effect basically tells you which criteria to consider and presents a clear winner that’s logically defensible. Our brains eat that up. All brains seem to eat it up. Other animals, including wallabies, hummingbirds, and fruit bats, fall for the decoy effect, too. In fact, you don’t even have to have a brain to fall for decoys! Studies show that amoebas (not animals but protists, single-celled, no brain) experience the decoy effect.

When scientists presented amoebas with popcorn…okay, it wasn’t popcorn. It was whatever amoebas eat in the biology lab at the University of Sydney. Instead of comparing tub size and price, the variables were food quality and light exposure (amoebas prefer darkness). Given two choices in which the higher food quality option was located in a brighter area, a roughly equal number of amoebas chose each option. Half preferred high light and high nutrition, while the other half chose low light and medium nutrition. Once a third option was added, however, one that had low light and low nutrition, more amoebas went for the low light, medium nutrition option.

So, now that you know about the decoy effect, will you stop falling for it? Probably not, at least not all the time. Reducing stress and comparing things have been deeply ingrained into our decision-making process. Is it ethical to use it? You’ll need to answer that for yourself, but it’s worth noting that choices can never be presented in a totally neutral way. Once you have a choice at all, you’ve introduced the bias of order. Think about elections (or don’t). There are laws that govern how candidates are ordered on a ballot because, whether advertent or inadvertent, it creates bias.

If it makes you feel better, using decoys is considered to be a “nudge,” the term coined by professors Cass Sunstein and Richard Thaler to describe “any aspect of choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing the economic incentives.” It’s not manipulation—it’s just a nudge. I’m not here to attack or defend it, just to let you know it’s happening to you all the time. I mean, you did eat that huge tub of popcorn.

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