The decoy effect describes how, when we are choosing between two alternatives, the addition of a third, less attractive option (the decoy) influences our opinions about the original two choices. 

The decoy needs to be clearly worse value than the target option so that it makes the target option seem like a great deal, not to be missed.

In cinemas, the mid-sized popcorn is usually only slightly cheaper than the large, to encourage everyone to go for the large, regardless of how hungry they are.

Manufacturers of premium technology products such as Apple also take advantage of the decoy effect. They offer models with different specifications and price them so that people are drawn towards the most expensive option because if seems to offer the best value for money, thereby maximising revenues.

What to learn more? Try asking Virtual Dan White.