Commercial · The decoy effect at the car dealership (Huber, Payne & Puto, 1982), The seminal study by Huber, Payne and Puto, published in the Journal of Consumer Research, demonstrated experimentally that adding a deliberately inferior option, a decoy, to a choice set (cars, beer, restaurants) significantly shifts preference towards the target option. Transposed to selling, the salesperson who conjures up a comparison alternative or a competing buyer steers the decision without touching their own offer. The result, replicated across six product categories, violates the economic principle of independence of irrelevant alternatives: the mere presence of an option alters the choice, which underpins the scientific legitimacy of option simulation.
Political · The credible threat as a fall-back option (Schelling), In The Strategy of Conflict (1960), Thomas Schelling, Nobel laureate in economics, shows that a negotiator's power rests on their ability to make a break-off option or a commitment credible. A leader who intimates that they have a coalition or an alternative course carries weight only if that option is perceived as achievable. Schelling establishes the technique's central paradox: it is credibility, not actual existence, that gives a simulated option its force, hence the importance of observable commitments (statements, preparations) that make the fall-back plausible in the opponent's eyes.
Diplomatic · Strengthening the BATNA at the diplomatic table (Fisher & Ury), The negotiators of the Harvard Program on Negotiation teach, from Getting to Yes (Fisher & Ury, 1981), that the primary source of diplomatic power is a solid BATNA. In the practice of chancelleries, this translates into foregrounding alternative partners, substitute trade deals, back-up alliances, in order to sway a counterpart. Ury's lesson is twofold: simulating an option has value only if you have first worked to equip yourself with real alternatives, failing which the bluff is fragile. At this level, the technique becomes a controlled projection of a balance of power that has actually been built.
Judicial · The threat of litigation as an alternative to settlement, In negotiating an out-of-court settlement, the lawyer who foregrounds a case ready to be argued simulates, or activates, the litigation option as the best alternative to the agreement. Max Bazerman's research on decision-making in negotiation shows that parties often overestimate their chances at trial (overconfidence), which makes the contentious option all the more deterrent to brandish. By displaying a willingness to go to court and the cost that this would impose on the opponent, a party raises the acceptable settlement threshold, the settlement becoming preferable to a costly judicial gamble.
Corporate · The phantom decoy in the tender (Pratkanis & Farquhar, 1992), Pratkanis and Farquhar formalised the concept of the phantom decoy: a superior yet unavailable option that, despite its inaccessibility, increases preference for the dominated target. In procurement and tenders, a buyer who mentions an ideal supplier "almost signed" but ultimately dropped creates a reference point that makes the remaining offers more compliant. Later work (Scarpi, 2013; Trueblood, 2017) confirms the effect but flags its limit: a poorly calibrated phantom decoy, or one perceived as manipulative, triggers a reactance that benefits the competitor, which precisely bounds the safe use of option simulation in business.
Everyday life · Competition for a scarce item (Cialdini), Robert Cialdini, in Influence, documents that the desire for an item intensifies not only when it is scarce, but above all when one is in competition to obtain it. He cites the classic example of the estate agent signalling to an undecided buyer that another viewer is interested in the property. In everyday life, selling a used car, renting a flat, the mere announcement "I have other interested parties" speeds up the decision and firms up the price. Cialdini warns, however, that the effect rests on plausibility: a scarcity too good to be true arouses suspicion and rebounds on its author.
