Mʏᴇʀs & Cᴏᴍᴘᴀɴʏ
Asymmetric Dominance (the Decoy Effect)
That's a funny title for a Success Story. But it will make sense by the end.
We had a case recently involving a bad wreck. The at-fault driver didn't have enough coverage. So there was an underinsured motorist (UIM) claim.
The UIM carrier did some ridiculous things before the lawsuit. One of them was failing to pay the undisputed value of the claim to our client.
So we filed suit. And we made a demand of $X. Or, in other words, offered to sell a release of all claims to it for $X.
The carrier came to us a couple of weeks ago and asked us if we would take less than $X.
A demand is usually a starting point for negotiations. But in this case I didn't think our client should take any less.
So instead of reducing our demand or saying that we were unwilling to negotiate, I presented a different option to the insurance company.
Instead of paying our original demand it could buy partial releases of the bodily injury claim ($.75X), the pre-suit bad faith ($.5X) and/or the post-suit bad faith ($.25X). These were offered a la carte.
The insurance company gagged. It liked the a la carte options even less than the full-meal deal first offered for $X.
So it decided to pay $X.
The a la carte array was clearly less favorable than the original offer to sell a release for $X. It was a decoy.
But it helped the insurance company realize that $X really was a fair price and it better buy the release now before the price went up.
Two claps for a la carte pricing (and asymmetric dominance) in personal injury claims!