What is the IKEA Effect?
The IKEA Effect is a cognitive bias in which we overvalue products that we’ve built or created ourselves; relative to how little value we'd place on pre-assembled items.
The IKEA effect is the reason why we're in love with LEGO kits and IKEA furniture; and it was named after the Swedish manufacturer and furniture retailer who sells furniture items that require assembly.
People’s love for IKEA products were explored by Michael I. Norton, Daniel Mochon and Dan Ariely in a series of 3 experiments. The results were published in a paper titled: The “IKEA Effect”: When Labor Leads to Love.
Source: Sketchplanations
They described the IKEA effect as “labour alone can be sufficient to induce greater liking for the fruits of one’s labour: even constructing a standardized bureau, an arduous, solitary task, can lead people to overvalue their (often poorly constructed) creations.”
The IKEA effect can be observed in many real-life examples, such as:
- When instant cake mixes were introduced in the 1950s to simplify life, American housewife was reluctant to buy them. It made cooking easy. Manufacturers had to change the recipe to add an egg to improve sales.
- Subway is popular because it gives people the feeling that they are making their own sandwich and it allows for customization.
- People are ready to pay a premium for apple plucking even though the actual cost of apples are less.
- Many distilleries and breweries have factory tours that allow customers to make their own beer or whisky and charge a hefty amount for it.\
- Haycations are popular in some parts of the world where people come and harvest the produce from the farm itself during holidays.
- Kids tend to like and eat more vegetables if they are involved in the cooking process.
- From shoes to toys, often manufacturers allow some sort of customization so that the IKEA effect takes over and results in more sales.
- In some animals such as rats and starlings, prefer to eat food from sources that required effort on their part.
In the study, a series of experiments were conducted by the researchers among a group who have split it into groups. I read the paper and have tried to distil down the results below:
In the first experiment, participants were split into builders and non-builders. Builders were asked to assemble an IKEA storage box themselves using the instructions. The non-builders were simply told to inspect an already assembled similar storage box. After this, the participants were told to bid a price for the product. The builder’s group valued the product more than the non-builders, even though the product was the same.
In the second experiment, builders were asked to make an origami frog or crane using instructions. Builders were asked to bid a price at which they would buy back these origami creations. The non-builders were told to bid a price on these creations by builders and also the origami creations by professionals. The results indicated that the builder’s bid for their own creations was high as they wanted to avoid losing their creation. Builders bid was close to the price that was bid by non-builders for expert origami creations.
In another experiment, the group was split into builders and incomplete builders. The builders were allowed to assemble an IKEA product but incomplete builders were not allowed to complete the assembly even though they had all the pieces. As expected, the bid prices of builders were significantly higher than that of the incomplete builders.
These all results indicated the magnitude and extent to which the IKEA effect can influence our decisions. If you’re interested you can read the detailed study here.
I’m new to this concept and this post is a working document. I’ll update more information as I discover more examples of the IKEA effect.
Nevertheless, it is an excellent cognitive bias that can be used by marketers and engineers to craft products that sell organically with the help of this bias. In the meantime, why not subscribe to my newsletter?
