In marketing, the term decoy effect (also called the asymmetric dominance effect) is used to describe the phenomenon of greater consumer preference for an item in a two-item consideration set caused by the addition of a third item that is asymmetrically dominated. An asymmetrically dominated item is in some ways better than one of the items, but in no way better than the other item.

For example, if there is a consideration set involving MP3 players, consumers will generally see higher storage capacity and lower price as positive attributes; while some consumers may want a player that can store more songs, other consumers will want a player that costs less. In Consideration Set 1, two devices are available: A digital audio player (DAP) is a device that stores, organizes and plays digital music files. ...

In Consideration Set 2, the asymmetrically dominated item, C, is better than B only in terms of storage and in no way better than A. The addition of item C—which most consumers would presumably avoid, given that a lower price can be paid for a model with more storage—causes item A, the non-dominated option, to be chosen more often than if only the two choices in Consideration Set 1 existed.

Item C is therefore a "decoy" whose purpose is to bring up sales of item A.

See also

• Compromise effect

References

• J. Huber et al (June, 1982). "Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis". The Journal of Consumer Research 9 (1): 90ff.