Mathematical Modeling of the Decoy Effect to Shift Consumer Preferences in House-Type Purchases

This study discusses the design of a Mechanism Design-based Decoy Effect Mathematical Model to shift consumer preferences from small-type houses to large-type houses. The model uses area-per-price utility that combines the ratio of building area and land area to price, and formulates the optimization of decoy attributes so that large-type houses dominate but remain close as comparators. The model is explained with a case study, namely large houses are set at a price of IDR, land area of m², and building area of m²; small houses are priced at million IDR, building area of m², and land area of m²; then two types of decoy house prices are set, namely million and million IDR. With the ratio of building and land area to price, namely and as well as and , large-type houses excel in terms of building-per-price and are equivalent in terms of land-per-price. Asymmetric decoy houses can be constructed by selecting and . The results of the mathematical model calculations obtained the closed solutions 'adjacent' and 'strong' for the two types of prices. Sensitivity analysis shows that the target margin advantage increases linearly with and the context scale , above the base margin . This model provides an operational and easily auditable mechanism in practice.