Compromise effect

The compromise effect is a cognitive bias in which we tend to choose the middle option from those on offer. The cheapest option makes us worry that it will be poor quality, and the most expensive one seems like an unnecessary waste. The middle choice therefore looks like a sensible, safe compromise that protects us from both extremes. We do not buy it so much because it is objectively the best, but because it is the one we feel most confident about. And a cleverly designed price list can exploit exactly this human desire for certainty.

Classification of the cognitive bias

• Cause (Cognitive Bias Codex): The need to act fast
• Mental area: Decision-making
• Marketing function: Price and value
• Buyer journey: Decision
• Cialdini’s principles: not applicable
• System 1 / System 2: System 1 (fast, automatic)

In brief

• What it is: when given three options, we most often choose the middle one.
• Why we do it: we see the extreme options as risky and the middle one as safe.
• Where you will encounter it: plans, drink sizes, product versions, pricing tables.
• How to use it: design your price list so that your target option is the middle one.

A real-life story

The effect was described scientifically by Itamar Simonson and Amos Tversky. In a frequently cited study from 1989, published in the Journal of Consumer Research, they showed that when a third, more expensive model is added to a choice of two cameras, sales of the originally more expensive of the two rise. That camera suddenly finds itself in the middle and becomes a sensible compromise. The same option, just different surroundings, and a different customer decision.

You know it from every café. They offer coffee in small, medium and large. On your own, you would hesitate between small and large, but as soon as there is a medium too, you reach for it almost automatically. It is not too big, not too small, it is just right. And that is exactly why the medium is there.

How the compromise effect works

When we are unsure what things are worth, we look for a safe choice. The middle option gives us the feeling that we have not wasted money, but have not saved in the wrong place either. It is a decision that is easy to justify to ourselves and to others. The effect is closely related to the decoy effect, where a third, deliberately inferior option pushes the choice towards the target one, and to anchoring, because the extreme prices act as anchors against which we measure the middle.

Use in marketing

1. Three options instead of two. If you want to sell a particular version, place it in the middle of a choice of three.
2. Design the price list around your goal. First decide what you want to sell, and only then work out the cheaper and more expensive options around it.
3. Highlight the middle choice. A “most popular” or “recommended” label on the middle option strengthens the effect even further.
4. The premium option as an anchor. Even if the most expensive version hardly sells, it does important work. It pushes the middle upwards.
5. Sizes and packages. Small, medium and large work just as reliably for drinks, portions and subscriptions.

How to protect yourself from the compromise effect

1. Start from your needs. Ask “which option will I actually use?”, not “which one is just right?”.
2. Assess each option on its own. Decide based on features and price, not on position in the table.
3. Watch out for the expensive decoy. The premium option may not be there for you, but to shift your sense of the middle.

How it connects with other biases

The compromise effect and the decoy effect are close relatives that often work hand in hand in a price list. Imagine three software plans at 199, 399 and 699 CZK (about 29 EUR). The premium plan at 699 CZK (about 29 EUR) serves as both an anchor and a decoy. Thanks to it, the middle plan at 399 CZK (about 16 EUR) looks like the best value for money, in other words a sensible compromise. If the premium plan disappeared, some customers would suddenly choose the cheaper option. Anchoring also comes into play, because the highest price sets the reference point for the whole price list.

Frequently asked questions

What is the compromise effect?

A cognitive bias in which, given three options, we most often choose the middle one, because we see the extreme options as risky.

How can the compromise effect be used in pricing?

By building a price list of three options so that the target product sits in the middle and looks like a sensible compromise between the cheap and the expensive option.

Euro amounts are approximate, converted at the Czech National Bank rate of 24.34 CZK per EUR on 29 October 2026.

Patrik Pilous

I am a marketing strategist and SEO consultant. I love the world of marketing, the internet and AI. I am at my best when planning business growth, setting and executing marketing strategy and optimising websites (SEO, GEO and, above all, sales).