The IKEA effect is a cognitive bias whereby we place a higher value on products that we at least partially created.
It gets its name after the large Swedish furniture manufacturer IKEA whose products usually come with some assembly required.
This bias is important to understand as it has implications for a variety of decision-makers, from consumers, such as people who shop at IKEA, to marketing managers. As such, it will likely influence the choices many of us make at some point in our lives.
What Is the IKEA Effect?
The Ikea effect is a cognitive bias that causes us to place a disproportionately high value on things we have helped to create.
In other words, people have an innate tendency to overvalue self-made things compared to things that were made by others, such as a piece of furniture that we put together ourselves.
Origin
The term was coined by three researchers — Michael I. Norton of Harvard Business School, Daniel Mochon of Yale, and Dan Ariely of Duke — who identified the bias in their paper The “IKEA Effect”: When Labor Leads to Love (2011).
They studied it by conducting experiments where the participants had to assemble IKEA boxes, build sets of legos, and fold different origamis. As a result, they made the following conclusion:
Labor alone can be sufficient to induce greater liking for the fruits of one’s labor: even constructing a standardised bureau, an arduous, solitary task, can lead people to overvalue their (often poorly constructed) creations.
Effects
This kind of tendency can appear counterintuitive to some: it may seem logical to assume that the extra labor and time people have put into something would result in reduced valuation. However, at least in certain situations, the reverse is true: when people have spent their time and energy to building a product, they show an increased willingness to pay for it.
Interestingly, the studies done by the aforementioned researchers illustrated that the IKEA effect is only present when we successfully complete tasks; when the participants in the studies failed to complete their products, or built and then unbuilt them, their labor didn’t lead to increased valuation.
Additionally, their account suggests that this cognitive bias doesn’t only affect those who are interested in “do-it-yourself”- type of projects, but also those who hold no interest in such undertakings.
Examples
Here are two examples of the IKEA effect.
Ikea Boxes
In a study¹ conducted by Michael I. Norton, Daniel Mochon, and Dan Ariely, two groups of participants received IKEA boxes that either had to be assembled or came fully assembled.
Then, the participants had an auction where they bid for the furniture they had assembled or been given.
The results showed that the builders were willing to pay significantly more (63%) than the non-builders, even though the furniture looked identical.
Instant Cake Mixes
A well-known example of the IKEA effect is when instant cake mixes first appeared on the shelves of supermarkets in the 1950s².
The idea was to offer a product that made cake-baking quick and easy for American housewives. However, there was a problem that initially made consumers reject the product: it made baking too easy.
The solution? Manufacturers added one more step to the recipe in which the customer was required to add their own fresh egg to the cake mix. This simple change introduced just enough labor to the baking process, making it the crucial factor in the subsequent adoption of the product.
References:
- ¹ Norton, M., Mochon, D. & Ariely, D. (2012) “The IKEA effect: When Labor leads to love“
- ² Shapiro, L. (2004) “Something from the Oven: Reinventing Dinner in 1950s’ America“
Further Reading:
