Third Choice

The Decoy Effect explains our tendency to change preference between two options when a third, inferior option is introduced.

You walk into a cinema. Small popcorn costs $3. Large costs $7. You hesitate. Then you notice the medium. $6.50. Suddenly the large feels obvious. Just 50 cents more for much more popcorn.

The medium size is not meant to be chosen. It exists only to make the large look irresistible.

In 1982, researchers Joel Huber, John Payne, and Christopher Puto at Duke University demonstrated this effect through experiments involving beer, cars, and televisions. They showed participants two options first, then added a third that was clearly inferior to one choice but only partially inferior to the other. This shifted preferences dramatically toward the option the decoy made look superior.

Behavioural economist Dan Ariely famously tested this with The Economist subscription pricing. Three options appeared:

When he presented this to 100 MIT students, 84% chose print-plus-online. Then he removed the print only option and asked different students. Now 68% chose online only, and only 32% chose print-plus-online. The least popular option became the most popular when the decoy disappeared.

The mechanism lives in comparison. When faced with uncertainty, our brains grasp for reference points. The decoy provides an easy comparison that makes one option feel obviously superior. We experience this as rational choice, but the rationality was designed into the context.

This pattern appears even in very young children and animals including birds, frogs, and monkeys, suggesting it may be evolutionary in nature. Your gym membership tiers. Your software subscription plans. Your coffee sizes. One option often exists not to be selected, but to make another option feel like a deal.

We think we are choosing freely. We choose within designed frames.

The Decoy Effect works at the moment of perception. Once you see three options, the comparison happens automatically. The frame is set. You cannot unsee it. This is how human cognition works.

But we do not just encounter decoys. We create them.

When you tell yourself "I will start exercising when I have more time," you have built a decoy. Later is the middle option between never and today. It makes never feel too extreme and today feel too demanding.

"This job is not great, but it is not terrible." You have framed your life with extremes. Staying becomes the reasonable middle. You are not settling. You are being practical. The decoy makes inaction feel like choice.

We build invisible comparisons constantly. We design frames that make the path of least resistance feel like wisdom. This is the deeper architecture. Not what coffee shops do to us. What we do to ourselves.

Once you recognize decoys, both external and internal, you can ask: what would I choose if the comparison did not exist?

Companies design frames to guide purchases. We design frames to guide our lives. Both work the same way. In the end, a decision will be made. By us or for us.