Vol: 13, Issue: 3 2023

Page: 101-117

Using the Decoy Effect on Telephone Packages: A Study on Consumer Behavior

Zayan Shaikh, Aakash Dhananjay Shanbhag

http://doi.org/10.37648/ijrst.v13i03.009

The decoy effect is a type of nudge found in behavioral economics that suggests that the introduction of a high-priced, low-value ‘decoy’ good into a choice set will prompt consumers to shift their preference from a lower-priced, option good to a higher-priced, target good. The theory has proven to become a recognized marketing tool used by firms following the coining of the term in 1982. However, despite the various applications of the theory to different industries, the implications of the theory have not been explored in the context of telephone packages provided by telecommunications firms. Therefore, in this paper, we will explore the impacts of the decoy effect in the context of telephone packages in the United Arab Emirates through means of surveys which will explore shifts in consumer preferences when presented with decoy packages for the two largest telecommunications firms in the country. The paper also assesses the extent of the success of the decoy, as well as the demographics in which the introduction of a decoy package proved to be most effective and the wider-reaching implications for telecommunications firms.