<commit_before>---
layout: post
published: true
title: THE DECOY EFFECT
mathjax: false
featured: false
comments: false
categories: 
  - interesting
tags: psychology
---

_**The Decoy Effect**_ is a very effective and powerful psychological technique that marketing companies use to take advantage of the loopholes in our brain. 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.

So, Lets assume there's a movie theatre selling popcorn.

_Small........$3.00_

_Large........$7.00_

Nearly, every person bought the small. When asked why, they said they felt $7 is tad too costly for a popcorn. 

Now after employing decoy effect, a median size "medium" was introduced (its sole purpose being a tool for comparison - that is, a decoy)

_Small........$3.00_

_Medium.....$6.50_

_Large.........$7.00_

and these were the revised prices.

Now, everyone bought the large because they felt large is reasonable because it is only 50 cents more than the medium. 

Now, this is how decoy effect works : it’s how marketers take advantage of comparison shoppers. They sell multiple products with features and prices that will steer you to the one they really want to sell you.

All you have to do is stroll through a grocery store to see this happen again and again with different sizes of products and different prices. _“I can get 24 cookies for $3 or 48 cookies for $5… but look over there, that bag of cookies has 36 cookies for $4.50. This 48 cookie bag is a real bargain!”_

If you notice keenly, they exploit this _"comparison"_ loophole of our brain to sell the exact thing they want and what we don't actually need.

Large pizzas, 1/2 kg flour, pen drives with extra storage.. They even use this technique for election campaigning. 

Its really amazing how our brain can interpret differently if it just has a comparison medium. The decoy.

## **The Truth about Relativity**

The ways in which people frequently regard their environment in terms of their relation to others; it is the way that the human brain is wired. People not only compare things, but also compare things that are easily comparable. 

For example, if given the following options for a honeymoon:

1.Paris (with free breakfast)

2.Rome (with free breakfast)

3.Rome (no breakfast included)

Most people would probably choose Rome with the free breakfast. The rationale is that it is easier to compare the two options for Rome than it is to compare Paris and Rome. The role of the decoy effect (or asymmetric dominance effect) in the decision process. 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. This effect is the "secret agent" in many decisions. In the example with the honeymoon options, Rome without free breakfast is the decoy. (It makes Rome with breakfast look superior to Rome without breakfast. Comparing Rome and Paris is difficult, so the easy comparison of Rome makes it more likely to choose Rome over Paris.) It makes Paris look inferior when compared to Rome with the free breakfast. 

Relativity helps people make decisions but it can also make them miserable. People compare their lives to those of others, leading to jealousy and envy. _“The more we have, the more we want”_  and the suggestion to cure is to break the cycle of relativity. To break the cycle, people can control what goes on around them. The focus on smaller "circles" can boost relative happiness, as can changing this focus from narrow to broad. When considering upgrading a phone, the consumer could think about what else they could buy with the money they would spend on the upgrade.<commit_msg>Updated 2014-05-18-the-decoy-effect.md<commit_after>---
layout: post
published: true
title: THE DECOY EFFECT
mathjax: false
featured: false
comments: false
categories: 
  - interesting
tags: psychology
---

_**The Decoy Effect**_ is a very effective and powerful psychological technique that marketing companies use to take advantage of the loopholes in our brain. 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.

So, Lets assume there's a movie theatre selling popcorn.

_Small........$3.00_

_Large........$7.00_

Nearly, every person bought the small. When asked why, they said they felt $7 is tad too costly for a popcorn. 

Now after employing decoy effect, a median size "medium" was introduced (its sole purpose being a tool for comparison - that is, a decoy)

_Small........$3.00_

_Medium.....$6.50_

_Large.........$7.00_

and these were the revised prices.

Now, everyone bought the large because they felt large is reasonable because it is only 50 cents more than the medium. 

Now, this is how decoy effect works : it’s how marketers take advantage of comparison shoppers. They sell multiple products with features and prices that will steer you to the one they really want to sell you.

All you have to do is stroll through a grocery store to see this happen again and again with different sizes of products and different prices. _“I can get 24 cookies for $3 or 48 cookies for $5… but look over there, that bag of cookies has 36 cookies for $4.50. This 48 cookie bag is a real bargain!”_

If you notice keenly, they exploit this _"comparison"_ loophole of our brain to sell the exact thing they want and what we don't actually need.

Large pizzas, 1/2 kg flour, pen drives with extra storage.. They even use this technique for election campaigning. 

Its really amazing how our brain can interpret differently if it just has a comparison medium. The decoy.

## **The Truth about Relativity**

The ways in which people frequently regard their environment in terms of their relation to others; it is the way that the human brain is wired. People not only compare things, but also compare things that are easily comparable. 

For example, if given the following options for a honeymoon:

1.Paris (with free breakfast)

2.Rome (with free breakfast)

3.Rome (no breakfast included)

Most people would probably choose Rome with the free breakfast. The rationale is that it is easier to compare the two options for Rome than it is to compare Paris and Rome. The role of the decoy effect (or asymmetric dominance effect) in the decision process. 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. This effect is the "secret agent" in many decisions. In the example with the honeymoon options, Rome without free breakfast is the decoy. (It makes Rome with breakfast look superior to Rome without breakfast. Comparing Rome and Paris is difficult, so the easy comparison of Rome makes it more likely to choose Rome over Paris.) It makes Paris look inferior when compared to Rome with the free breakfast. 

Relativity helps people make decisions but it can also make them miserable. People compare their lives to those of others, leading to jealousy and envy. _“The more we have, the more we want”_  and the suggestion to cure is to break the cycle of relativity. To break the cycle, people can control what goes on around them. The focus on smaller _"circles"_ can boost relative happiness, as can changing this focus from narrow to broad. When considering upgrading a phone, the consumer could think about what else they could buy with the money they would spend on the upgrade.
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