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I can see those decoy grenades in the buy screens, but all I see it doing (when anybody uses it) is that it just does a little bit of flashes.

What is it for? Why should I spent 200$ on something that just does fireworks?

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Here's an example of a successful decoy grenade: – Decency Aug 23 '12 at 7:25
Decoy grenades should only cost $50 now, making them cheap, but useful diversions. – waifu Jun 2 '13 at 22:15
up vote 9 down vote accepted

The decoy grenade will cause the enemy to hear gunfire sounds (based on the thrower's strongest weapon) as well as having a little popup on their radar showing the presence of an enemy. Its mostly to trick the enemy into thinking that you are somewhere else and that they're being shot at.

Its not too useful if you are already entirely silent and sneaking up on an enemy though.

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