Choices often occur relative to what is on offer rather than based on absolute preferences. The decoy effect is technically known as an ‘asymmetrically dominated choice’ and occurs when people’s preference for one option over another changes as a result of adding a third (similar but less attractive) option.  For example, people are more likely to choose an elegant pen over $6 in cash if there is a third option in the form of a less elegant pen (Bateman et al., 2008). While this effect has been extensively studied in relation to consumer products, it has also been found in employee selection (e.g. Slaughter et al., 2006), apartment choices (Simonson, 1989), or as a nudge to increase hand hygiene (Li et al., 2018).

 

Bateman, I. J., Munro, A., & Poe, G. L. (2008). Decoy effects in choice experiments and contingent valuation: Asymmetric dominance. Land Economics, 84(1), 115-127.

Li, M., Sun, Y., & Chen, H. (2018). The decoy effect as a nudge: Boosting hand hygiene with a worse option. Psychological Science. Retrieved from https://doi.org/10.1177/0956797618761374.

Simonson, I. (1989). Choice based on reasons: The case of attraction and compromise effects. Journal of Consumer Research, 16(2), 158-174.

Slaughter, J. E., Bagger, J., & Li, A. (2006). Context effects on group-based employee selection decisions. Organizational Behavior and Human Decision Processes, 100(1), 47-59.