Extremeness Aversion (Decoy Pricing)
Add a premium option nobody buys to make your target option look like the sensible middle
- Difficulty
- Easy
- Time to result
- ~weeks to results
- Steps
- 4
- Confidence
- 88%
Tversky's 1993 camera study showed that adding a third, expensive option shifts buyers toward the mid-tier: with two cameras the split was 50/50, but adding a pricey third camera moved choice to 3-to-1 in favour of the middle camera. People use 'pick the middle' as a rule of thumb, fearing the cheapest looks mean and the dearest looks like showing off. Marketers exploit this by introducing a premium decoy they never expect to sell — its mere presence makes the target option look reasonable. Suckley and Lichtenstein's craft-beer study adds a refinement: because the first price seen is the strongest anchor, listing the most expensive item first (high-to-low) lifted average spend by 4% versus the conventional low-to-high order.
Origin
Amos Tversky named extremeness aversion in a 1993 camera experiment; Suckley and Lichtenstein extended it with a craft-beer-bar menu-ordering study. Substack, Netflix and Spotify all use the tactic.
Core principles
- 01People avoid the cheapest option (fear of tacky) and the dearest (fear of overpaying)
- 02The middle option feels safe by default
- 03You can shift willingness-to-pay by adding options nobody is expected to buy
- 04The first price seen is the most powerful anchor
How to run it
- 1
Name your target tier
Decide which option you most want customers to choose — usually the mid-priced one.
- 2
Introduce a premium decoy
Add a visibly more expensive tier above the target that you don't expect many to buy. Its role is comparison, not revenue.
Pro tip A 'founding member' or multi-year plan works well as the decoy.
- 3
Lead with the highest price
Because the first price anchors expectations, present options high-to-low so everything after looks better value.
Watch out On websites, monitor bounce — an uncommitted visitor may leave on a high opening price.
- 4
Measure two metrics
Track both average order value and conversion rate; a lift in one can mask a drop in the other.
In the wild
Substack creators offer monthly, yearly, and a 'founding member' tier priced like four or five years upfront — rewarded only with a token pin or logo. Almost nobody picks it, but its presence anchors the yearly plan as the sensible middle choice, nudging subscribers to the tier the creator actually wants sold.
→ Higher take-up of the standard annual plan via a decoy nobody buys.
A restaurant lists a £350 six-person tasting platter at the top of the menu. Diners break into a sweat, then feel the £10 focaccia is a bargain by comparison — the expensive anchor drags every other price down.
→ Perceived value of standard items rises against the anchor.
Common mistakes
Ordering cheap-to-expensive
Most brands list basic-to-premium left-to-right, wasting the anchor; the first (highest) price seen should set the reference point.
Pushing the anchor too far
An absurd top price on a one-to-one negotiation reads as bad faith and discredits you — Chris Voss's warning — though a clearly novelty item (a £3,000 Vespa on a menu) can escape fairness norms.
Is it for you?
Best for
Tiered subscriptions, menus, and product ranges where you want to steer buyers to a specific option.
Not ideal for
Websites where an off-putting top price risks bouncing uncommitted visitors.
From the transcript
“You can shift people's willingness to pay by introducing a super expensive item that you never expect anyone to purchase.”
“It's the first price that you see that is the most powerful anchor... you should go high, medium, low rather than what most brands do,…”
From the episode
8 Psychology Hacks Behind The World’s Biggest Businesses - Richard Shotton - #626
Richard Shotton