Price is the most sensitive aspect of the marketing mix, and it takes a lot of consideration to establish prices that encourage consumers to spend more. Choices are frequently made based on what is available rather than on absolute desires. An 'asymmetrically dominated choice' is the technical term for the decoy effect. When consumers are faced with a third (similar but less appealing) alternative that is asymmetrically dominant, they will tend to have a specific change in preference between two options. If there is a third alternative in the shape of a less elegant pen, consumers are more likely to choose an elegant pen over $6 in cash. The purpose of the decoy is to steer customers away from the "competitor" and toward the "target," which is usually the more expensive or profitable choice. Multiple behavioral experiments have shown that higher choice complexity increases anxiety and makes decision-making more difficult. The decoy effect is subtle, yet it is effective.
Manya Jha is a first year student of Economics at Indraprastha College for Women
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