Theories Of Decoy Theory

THEORETICAL FRAMEWORK

The Decoy effect
First of all, there are many theories on how you can affect consumers purchase behaviour, the decoy option (asymmetrically dominated choice) is one of them. This effect happens in a choice set, in which there are an option which dominates another choice in all dimensions (Bateman, Munro & Poe, 2008). For instance, if there are two products A and B, A is more expensive than other, but a bit better. While putting the third option C, which would be even more expensive, but technically irrational for every customer. Then this appearance of the third option would make option A more attractive than option B, according to the theory. Another, more realistic example could be internet subscriptions. Assume that

They made an experiment where people had to choose between tour packages to Las Vegas and Florida. The results showed that adding asymmetrically dominated choice influence some of the travel agency customers to select more expensive option and, therefore, increase revenues for the company without adding additional expenses to the agency (Josiam & Hobson,1995).
However, there were findings that contradicted with the theory. Zhen and Yu found that 3 year olds were not affected by the decoy effect, but test with 5 and 7 years old, had an impact and showed significance which was similar with the young adults (Zhen & Yu, 2016). In addition, another study found that the effect was not as strong as other studies stated and found that adding qualitative-verbal descriptions in the choice sets can lower the effectiveness of the decoy choice theory (Yang & Lynn, 2014).
Lastly, because previous researches emphasized the decoy effect and found different results of this theory, the following hypothesis was created that would analyse the decoy option theory in context which differed from existing researches by the setting of the experiment.
H1. Adding the decoy option, between two gym subscription choices (Making 3 choices instead of 2) will increase significantly total sales of

This effect is called “the middle option bias” in other articles could be described as a “Centre-option effect”, “Compromise effect” or simply “Middle bias”. Furthermore, study finds that people tend to select the middle option when they have to choose between products (Bar-Hillel, 2015). For example, if there are 3 options of the product, customer that does not come to the shop or a website knowing precisely what he wants, according to the middle option bias, would tend to select the option placed in the centre.

Furthermore, Simonson and Tversky confirmed the middle option theory. They performed an experiment that involved adding third option next to the existing two cameras choices. The results showed, that there was a big difference between 2 and 3 options, because adding a third option makes the middle choice more attractive (Simonson & Tversky, 1992). In addition, similar results were shown in the test of people’s behaviour in questionnaire’s. There, it was concluded that the middle option is effective and that position of the question matters (Kalton, Roberts & Holt,