How decoy options ferment choice biases in real-world consumer decision-making

Area of Science:

• Behavioral Economics
• Consumer Psychology
• Marketing Science

Background:

• The decoy effect, a choice bias, is well-documented in controlled lab settings.
• Its occurrence in real-world, complex consumer choice environments remains under-investigated.
• Understanding context effects in natural settings is crucial for consumer behavior research.

Purpose of the Study:

• To investigate the presence and impact of decoy effects in a large-scale, real-world consumer purchasing dataset.
• To examine how inferior decoy options influence choices between competing products.
• To determine if decoy effects manifest in complex choice environments outside of laboratory conditions.

Main Methods:

• Utilized a novel methodology to analyze a dataset of 3.6 million UK grocery wine transactions.
• Applied econometric analysis to identify the influence of decoy options on purchase decisions.
• Examined wine choices varying in quality and price across diverse consumer contexts.

Main Results:

• The presence of dominated decoy options significantly increased the likelihood of consumers choosing a target option.
• This attraction effect, a hallmark of the decoy effect, was observed in real-world grocery transactions.
• The magnitude of the decoy effect was modest (approximately 1% shift in preference) and varied based on individual consumer experience.

Conclusions:

• Decoy effects are detectable and influential in complex, real-world consumer choice settings, not just in labs.
• Consumer purchasing behavior is susceptible to subtle contextual influences, even in large choice sets.
• Individual consumer history plays a significant role in modulating the impact of choice architecture on decision-making.