That's because it's difficult to evaluate anything in an absolute way. You make decisions relative to each other, based on the information you have at the time.

That's because it's difficult to evaluate anything in an absolute way. You make decisions relative to each other, based on the information you have at the time. In your example, of selling three products, they usually price the middle product higher to make the third option more attractive by comparison and without the middle product people are more likely to go with the cheaper option. The middle option is the decoy. They don't expect anyone to buy it and they don't really want anyone to, it's just there to give the buyer a reason to make the choice.