Behavioral Design

Decoy effect

Properties2
tagsbehavioral-economics, pricing, choice-architecture, paywall
aliasesDecoy effect, Asymmetric dominance effect

4 min read

Decoy effect

A pricing technique where adding a third, clearly inferior option (the “decoy”) to a two-option menu shifts choices toward a target option. The decoy is not meant to be chosen; it’s there to make another option look better by comparison.

Also known as the asymmetric dominance effect.

How it works

Brain imaging studies show that adding a decoy reduces cognitive conflict — comparing two similar options is hard, so people defer the decision. Adding a third option that’s strictly worse than one of the two gives the brain an easy comparison to latch onto, which simplifies the whole decision and pushes the choice toward the dominating option.

In mobile game shops

Three-tiered pricing (small / medium / large) is everywhere in mobile games. The “small” pack is often a decoy: priced just below medium with disproportionately worse value, making medium look like an obvious win. The result: more players buy medium than would have if the choice were just small vs. large.

Often paired with price anchoring: showing the highest-priced pack first sets a reference point that makes everything below it feel reasonable.

In SaaS pricing — Moonly’s annual-only trial (+39% conversion, +47% revenue per 100 installs)

Per Copy These SaaS Growth Tricks (video), Moonly offered their free trial only on the annual plan, never on monthly. Conversion rose 39%; revenue per 100 installs rose 47% (the larger figure reflects the higher-ticket plan surviving the funnel).

This is the asymmetric-dominance variant played not on price but on trial access. The monthly plan isn’t a price decoy — it’s a trial-access decoy. Once one plan has the trial and the other doesn’t, the comparison collapses: the annual plan reads as obviously the right choice for “the user who wants to try before paying.”

Tim Gabe’s framing of the move: “By adding exclusive value to one plan, you’re not just offering more — you’re guiding decisions through asymmetry.” The decoy doesn’t have to be inferior in price terms. It just has to be strictly inferior on the dimension the user is using to choose.

The inverse — when removing a decoy beats showing one

The decoy effect’s failure mode shows up in Jonathan Parra’s paywall tests at Superwall (I Made 4,000 App Paywalls and Learned This (video)): showing three products (weekly / monthly / annual) upfront converts worse than hiding two of them behind a view all plans drawer.

In the classical decoy logic, the weekly plan is a price decoy that should make annual look obvious. In Parra’s data the opposite happens — the three-product picker creates decision fatigue (Cognitive load) before the decoy logic can fire. The user sees three things and chooses to not choose by closing the paywall.

Two implications:

  1. Decoy effects compete with cognitive load. When the three options can be parsed quickly (in-game shop with one-line price packs), the decoy wins. When the three options require comparing subscription cadences against feature lists, the load tax exceeds the decoy benefit.
  2. A hidden alternative can still anchor. Parra’s view all plans drawer preserves the decoy function (the weekly plan exists, visibly, behind a click) without paying the load cost upfront. The user encounters the decoy only after opting in to comparing.

This isn’t a refutation of the decoy effect — it’s a placement rule. Decoys work when they’re easy to evaluate; they fail when they’re effortful to evaluate. On a paywall with three subscription cadences, hide two; on a shop with three SKUs, show all three.

Sources

Graph View