The decoy effect is a cognitive bias where consumers change their preference between two options when presented with a third, less attractive option. This third option, known as the decoy, is designed to make one of the original options appear more appealing. For example, if a consumer is choosing between a small and a large coffee, introducing a medium coffee that is priced close to the large can lead them to prefer the large option. This effect is commonly used in marketing strategies to influence purchasing decisions. By strategically placing a decoy, businesses can guide customers toward a specific choice, increasing sales of the desired product. Understanding the decoy effect can help consumers make more informed decisions.