Predictably Irrational: The Influence of "decoy" on Buyer Behaviour

In this essay I set out to describe the influence of "decoy" on buyer behaviour. I try to explain what "decoy" is.

First, i want the reader to consider an experiment. Below is an advertising from web site of a magazine, the Economist.

SUBSCRIPTIONS

Economist

Web subscription US $ 59.00

Print subscription US $ 125.00

Print & web subscription US $ 125.00

In the case of the Economist, you may not have known whether the Internet-only subscription at $59.00 is a better deal than the print-only option at $125. But you certainly knew that the print-and-Internet option for $125 is better than the print-only option at $ 125. In fact, you could deduce that in the combination package,the Internet subscription is free! So, I think most people would choose the third one. Compared with others the third one looks like very tempting. Among participants who have been tested, the majority preferred the Internet-and-print deal.

So what was going on here? Let us start with a basic observation: most people do not know what they want, unless they see it in context. We don't know what kind of brand's clothes we want, until we see a movie star in some ceremony wearing some brand's clothes. We don't know what kind of speaker system we like-until we hear a set of speakers that sounds better than the previous one. What force influenced customer's decisions?

In the case of the Economist, we all saw the advantage in the print-and-Internet offer over the print-only offer. Therefore, the print-only offer could be called "decoy". But people were they influenced by the "decoy"? In other words, if we removed the decoy then the choices of people will be changed. This time majority participants chosen Internet-only option for $59. What could have possibly changed their minds? Nothing rational. It was the decoy to changed your decision.

Here's another example of the decoy effect. You are planning a travel in Europe. There are two city waiting for you Rome and Paris. The travel agent arranges many vocation packages for each city, which includes airfare, hotel accommodation, tours, and a free breakfast every morning. Which would you select?

For most people, making decision between in Rome and Paris is not easy. Both them have a good food, and fashionable shop. It's not an easy to choose. But