The Decoy Effect versus eWOM

Past research clearly shows that the decoy effect is able to change consumer preference. In recent years, studies have questioned the practical significance of the effect as the conditions under which the decoy effect occurs are so restrictive. Subsequently Huber, Payne, and Puto (2014) commented that with the emerging of digital marketplace the decoy effect could very well exist in real life situations. This thesis analyses if the decoy effect exists in a digital marketplace and if so what effect eWOM has on it. Online surveys are used to replicate an online shopping choice sets for ice cube trays. The control and treatment 1 choice-sets are used to test whether the decoy effect exists in a digital market. Treatment 2 is used to measure the effects of a decoy with a negative review on the strength of the decoy effect and Treatment 3 measures if the decoy effect is less strong in case the decoy has a minimum amount of reviews. A total of 481 subjects are randomly served with one of these choice-sets. The results show that the decoy effect does exist in a digital market place. There is no clear evidence which proves that a minimum amount of reviews influences the strength of the decoy effect. The data does suggest that a decoy with a negative review reduces the strength of the decoy effect.