IKEA effect

The IKEA effect is a cognitive bias in which consumers place a disproportionately high value on products they partially created.^[1] The name derives from the Swedish manufacturer and furniture retailer IKEA, which sells many furniture products that require assembly.

Overview

Experimental results on the IKEA effect were first published by Michael I. Norton of Harvard Business School, Daniel Mochon of Yale University, and Dan Ariely of Duke University in 2011. Their experiments demonstrate that self-assembly impacts the evaluation of a product by its consumers. The results suggest that when people use their own labor to construct a particular product, even if done badly, they value the end result more than if they had not put any effort into its creation.^[2]

The experiments

Michael Norton, along with his colleagues, conducted an experiment based around the principal question whether consumers would pay a higher price for products that required self-assembly.^[3] The research consisted of three different experiments where the participants built with Lego, folded origami figures and assembled IKEA boxes.

In the first experiment, the subjects were given the task of finishing self-assembly IKEA furniture. Researchers then priced the objects the experimenters had assembled as well as already assembled IKEA furniture. The experiment examined whether subjects were willing to pay more for furniture they assembled themselves, as opposed to pre-assembled furniture.^[1] Results showed that the subjects were willing to pay 63% more for the former.^[4]

In the second experiment, researchers asked subjects to make either origami frogs or cranes. They then asked the subjects how much they were willing to pay for their own work. Following this, researchers gathered another group of subjects who had not taken part in the origami creation.^[1] The new subjects were asked how much they were willing to pay for an origami built by the participants.

Following this, the researcher asked how much they were willing to pay for an origami built by an expert. They were willing to pay more for the latter. The first test group were given a display of origami. It consisted of one set of origami they had built themselves and one set that had been built by experts. Without knowing that their own origami was part of the display as well, these subjects were asked to bid on the different origami. They valued the origami they created equally high as those created by professionals.^[1]

The final, third experiment, involved two sets of subjects. The first set were told to completely assemble a piece of IKEA furniture. The second set were also instructed to assemble a piece of IKEA furniture, but only partially. Both groups then took part in bidding over these objects. Results showed that individuals who had built the box completely were willing to pay more than the individuals who only partially built the box.^[1]

Limitations

Additional research has shown that labor leads to higher valuation only when the labor is fruitful. When participants failed to complete a task requiring their own labor, the IKEA effect dissipated.

Implications

The IKEA effect is thought to contribute to the sunk costs effect, which occurs when managers continue to devote resources to sometimes failing projects they have invested their labor in. The effect is also related to the "not invented here" syndrome, where managers disregard good ideas developed elsewhere, in favor of (possibly inferior) internally developed ideas.^[1]

Notes

References

External links

• TED Talk by Dan Ariely on the IKEA effect