When and how does decoy effect work? The roles of salience and risk aversion in the consumer decision-making process

The decoy effect has attracted much attention in the field of marketing and indicates that consumers’ preferences between two options will change after adding a third asymmetrically decoy option. Marketers usually hope for the decoy strategy to help improve a consumer’s preference for a target product. However, both empirical evidence and real-world examples show that the effectiveness of the decoy effect is not uniform. This paper proposes an adjusted consumer decision model based on salience theory and presents the results of an eye-tracking experiment to provide empirical evidence for it. The results show that risk aversion can moderate the effect of a decoy on salience and further impact preferences for a target product. Our study makes theoretical contributions that extend salience-based explanations for the decoy effect and have practical implications for marketers seeking to formulate effective decoy strategies, especially in the electronic commerce environment.