Tracking the decoy

Maximizing the decoy effect through sequential experimentation

M.C Kaptein, Robin Van Emden, Davide Iannuzzi

Research output: Contribution to journalArticleScientificpeer-review

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Abstract

The decoy effect is one of the best known human biases violating rational choice theory. According to a large body of literature, people may be persuaded to switch from one offer to another by the presence of a third option (the decoy) that, rationally, should have no influence on the decision-making process. For example, when asked to choose between a laptop with a good battery but a poor memory and a laptop with a poor battery but a good memory, customers may be induced to shift their preference if the offer is accompanied by a third laptop that has a battery as good as the latter but even worse memory—an effect that has clear applications in marketing practice. Surprisingly, renowned decoy studies have resisted replication, inducing scholars to challenge the scientific validity of the phenomenon and question its practical relevance. Using a treatment allocation scheme that takes inspiration from the lock-in amplification schemes used in experimental physics, we were able to explore the entire range of decoy attribute values and demonstrate that some of the reproducibility issues reported in the literature result from a suboptimal initial conditions. Furthermore, we demonstrate that our approach is able to sequentially identify the features of the decoy that maximize choice reversal. We thus reinstate the scientific validity and practical relevance of the decoy effect and demonstrate the use of lock-in amplification to optimize treatments.
Original languageEnglish
Pages (from-to)16082
JournalPalgrave Communications
Volume2
DOIs
Publication statusPublished - 2016

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Physics
Marketing
rational choice theory
decision-making process
physics
marketing
customer
trend
Battery
Experimentation
Laptop
Amplification
Practical relevance
Lock-in
literature
Decision-making Process
Reproducibility
Rational Choice Theory
Replication
Rational choice theory

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title = "Tracking the decoy: Maximizing the decoy effect through sequential experimentation",
abstract = "The decoy effect is one of the best known human biases violating rational choice theory. According to a large body of literature, people may be persuaded to switch from one offer to another by the presence of a third option (the decoy) that, rationally, should have no influence on the decision-making process. For example, when asked to choose between a laptop with a good battery but a poor memory and a laptop with a poor battery but a good memory, customers may be induced to shift their preference if the offer is accompanied by a third laptop that has a battery as good as the latter but even worse memory—an effect that has clear applications in marketing practice. Surprisingly, renowned decoy studies have resisted replication, inducing scholars to challenge the scientific validity of the phenomenon and question its practical relevance. Using a treatment allocation scheme that takes inspiration from the lock-in amplification schemes used in experimental physics, we were able to explore the entire range of decoy attribute values and demonstrate that some of the reproducibility issues reported in the literature result from a suboptimal initial conditions. Furthermore, we demonstrate that our approach is able to sequentially identify the features of the decoy that maximize choice reversal. We thus reinstate the scientific validity and practical relevance of the decoy effect and demonstrate the use of lock-in amplification to optimize treatments.",
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Tracking the decoy : Maximizing the decoy effect through sequential experimentation. / Kaptein, M.C; Van Emden, Robin; Iannuzzi, Davide.

In: Palgrave Communications, Vol. 2, 2016, p. 16082.

Research output: Contribution to journalArticleScientificpeer-review

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