Background: Know & Recognize: Decoys
Economist subscriptions decoy
It is an ad used as an example to explain what are decoys in Accounting.
The Economist Subsription Centre gave the consumers three choices in buying or renewing the type of subscriptions.
1. Internet only - $59
2. Paper only - $125
3. Both Internet and paper edition - $125
Without the second option (Print edition), more people would choose the first one (Internet edition) as this choice was cheaper. Also, it was an online ad, so certainly most people would choose electronic version.
However, The Economist Subscription Centre wanted to earn more by guiding the consumers to choose the more expensive option: Print & web. So they added the second option: Print only and with the same price as the third option. When consumers saw this ad, instead of comparing the first and third options, they would more focus on comparing the second and third options as they two had only one difference. Obviously, the third one was much better. They would choose the third one because they feel like taking advantages.
Although the Economist Subscription Centre had to pay the costs of hard copy, they could still earn a lot using the method of decoys.
This method could be also used in network accounting to guide customers to pay more.
Dan Ariely: "The Truth About Relativity"