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The IKEA effect is a cognitive bias in which consumers place a disproportionately high value on products they partially created. The name derives from the Swedish manufacturer and furniture retailer IKEA, which sells many furniture products that require assembly.
Contents
Identification and naming
The IKEA effect was identified and named by Michael I. Norton of Harvard Business School, Daniel Mochon of Yale, and Dan Ariely of Duke, who published the results of three studies in 2011.
They defined the IKEA effect as follows: "labor alone can be sufficient to induce greater liking for the fruits of one's labor: even constructing a standardized bureau, an arduous, solitary task, can lead people to overvalue their (often poorly constructed) creations."
History and background
Norton, Mochon, and Ariely cited other researchers' previous work on "effort justification," which had demonstrated "that the more effort people put into some pursuit, the more they come to value it." This phenomenon had been observed by Leon Festinger (1957) and "in domains as varied as psychotherapy (Axsom & Cooper, 1985) and brainwashing (Schein, 1956)."
Product designers were familiar with the IKEA effect long before it was given a name. Norton and his colleagues noted that, while not yet named or scientifically established, it had been recognized by marketers for a long time.
For instance, when instant cake mixes were first marketed in the 1950s, many homemakers were resistant because "the mixes made cooking too easy, making their labor and skill seem undervalued."
They "did not feel invested in the process and thus, left no value on the product." In response to this problem, the producers of the cake mixers made a simple change in the recipe: homemakers were required to added an egg. As a result of this change, "sales soared and instant cake mixes became a mainstay in nearly every home in the country. Simply by adding one step in the mix process, cracking an egg, suddenly the domestic goddesses felt they were actually baking. The mix was then more difficult to stir—which made the work more laborious and thus, more rewarding!"
Norton and his fellow researchers also cited the "Build-a-Bear" product, which allows people to make their own teddy bears. Many consumers enjoy this option, even though they are charged a high price for a product for which, thanks to their labor, the manufacturer does not have to pay production costs. In addition, the researchers pointed out the popularity of "haycations," whereby city people pay to do farmers' work for them. In all these cases, the researchers posit, people seem more willing to pay for an item into which they have put a degree of their own labor.
The researchers pointed out that as a result of earlier consumer psychology studies that essentially pointed to the existence of the IKEA effect, many firms had already "shifted...from viewing customers as recipients of value to viewing them as co-creators of value." One element of this shift was the involvement of consumers in product design, marketing, and testing.
A 1959 study by Aronson and Mills that has been described as a "classic" produced results that seem to reflect either the IKEA effect or a closely related phenomenon. Female participants "were forced to undergo either no initiation, a mild initiation, or a severe initiation before joining a discussion group." The women's later appraisal of the group's value was proportional to the effort that had been demanded of them before being allowed into the group.
Citing other researchers' work demonstrating "a fundamental human need for effectance – an ability to successfully produce desired outcomes in one's environment," Norton et al. argued that "one means by which people accomplish this goal is by affecting and controlling objects and possessions." They placed special emphasis on Bandura's "seminal" 1977 study showing that "successful completion of tasks" was a "crucial means by which people can meet their goal to feel competent and in control."
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. 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. Results showed that the subjects were willing to pay 63% more for the former.
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. 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.
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.
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.