The IKEA effect is a cognitive bias in which consumers place a disproportionately high value on products they partially created. The name refers to Swedish manufacturer and furniture retailer IKEA, which sells many items of furniture that require assembly.
A 2011 study found that subjects were willing to pay 63% more for furniture they had assembled themselves than for equivalent pre-assembled items.
History and background 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 described the IKEA effect as "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."
Norton, Mochon, and Ariely cited other researchers' previous work on "effort justification" which had demonstrated that the more effort someone put into something, the more someone will value it. This phenomenon had been observed by Leon Festinger (1957) and in realms ranging from psychotherapy (Axsom & Cooper, 1985) to 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. Norton and his fellow researchers 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 transitioned from viewing consumers as "recipients of value" to instead "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 required to undergo "no initiation, a mild initiation, or severe initiation" before entering 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 by Norton et al. Norton and his colleagues conducted research to find out if consumers would pay higher prices for products that required self-assembly. The research consisted of three different experiments in which the participants built Lego items, folded origami figures and assembled IKEA boxes.
In the first part of the experiment, part of the subjects were given the task of assembling IKEA furniture, while others were allowed to examine a pre-built version of the same furniture. Researchers then asked the participants to price the items. The results showed that the subjects who built the furniture were willing to pay 63% more than the ones who were given pre-built furniture.
In a second part of the experiment, researchers asked subjects to make either origami frogs or cranes, following a provided instruction sheet. They then asked the subjects how much they were willing to pay for their own work. Researchers then 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 researchers displayed origami made by experts to another set of non-builders and asked them how much they were willing to pay for it. It was found that the builders were willing to pay about five times more for their own creation than the non-builders were, as expected from the first part of the experiment. When asked how much somebody else would pay for their origami, the builders also gave a high price to their work, showing that they actually think that the origami has a high value. The second set of non-builders were willing to pay for the well-crafted origami about as much as the builders were willing to pay for their origami.
The third and final 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 had only partially built an item.
Conclusions The experiments by Norton and his colleagues demonstrated that self-assembly affects the evaluation of a product by its consumers. The results suggest that when people construct a particular product themselves, even if they do a poor job of it, they value the end result more than if they had not put any effort into its creation.
Participants, wrote Norton and his colleagues, "saw their amateurish creations as similar in value to experts' creations, and expected others to share their opinions." To be sure, "labor leads to love only when labor results in successful completion of tasks; when participants built and then destroyed their creations, or failed to complete them, the IKEA effect dissipated." The researchers also concluded "that labor increases valuation for both 'do-it-yourselfers' and novices."
The researchers noted that their use of "simple IKEA boxes and Lego sets that did not permit customization" did not prevent participants from manifesting the IKEA effect.
Later research Gibbs and Drolet (2008) showed that raising consumers' energy levels can persuade them to select experiences that involve greater effort. But companies have been warned not to challenge consumers too much, lest they be unable to complete a task and thus end up dissatisfied.
Research by Dahl and Moreau (2007) suggests that customers are more satisfied when there is a limit to the amount of creativity they can express in assembling a product.
Underlying mechanisms Norton et al. mentions three key underlying mechanisms in the study. One key underlying mechanism of the IKEA effect mentioned in Norton et al.'s study is competence also known as effectance. Effectance is a fundamental human need, it is "an ability to successfully produce desired outcomes in one's environment" Norton et al. suggests that the "increase in liking that occurs due to effort coupled with the positive feelings of effectance that accompany successful completion of tasks is an important driver of the increase in willingness to pay"; thus, greater IKEA effect. "Effectance itself has two psychological components: actual control over outcomes and mere perceived control over outcomes." Norton et al.'s study covers both components of effectance as "the participants are in "control" by building their own products yet assembling them according to preset instructions (i.e. "not in control")." This is evidence of perceived and actual control explaining the underlying mechanisms of the IKEA effect. This finding aligns with previous literature as Bandura's seminal research on self-efficacy (1977) also found that successful completion of tasks allows people to feel competent and in control.
Another underlying mechanism of the IKEA effect is social utility. The impact of social utility on the IKEA effect depends on the type of product being assembled – hedonic or utilitarian. Hedonic products are focused on providing pleasure and enjoyment such as Legos or origami. Utilitarian products are purchased for practical functions such as IKEA boxes. In Norton et al.'s study, "participants who built Legos and origami mentioned a desire to show them to their friends, suggesting that the increase in willingness-to-pay for hedonic products may arise in part due to the social utility of displaying one's creation to others offered by assembling these products." In contrast, "social utility is likely to play a more minor role in increased liking for self-assembled utilitarian products like the storage boxes."
Finally, Norton et al. also briefly touched on enjoyment as a possible underlying mechanism of the IKEA effect. The more enjoyment the construction task brings, the higher the valuation is likely to be.
Ling et al.'s study identified self-expression with aesthetic preference and self-esteem as two boundary conditions as an underlying mechanism of the IKEA effect in self-expressive mass customisation. To what extent of choice in mass customisation toolkits have an impact on perceived value of self-designed products, how self-expression mediates this effect, and what kind of consumers are more inclined to experience the IKEA effect were examined. Ling et al., found that the IKEA effect is more pronounced among romanticism-propending and high self-esteem consumers resulting in increased valuation of the self-designed product. This is because "romanticism-propending consumers appreciate creativity and originality" as opposed to classicism-propending consumers. In addition, "individuals with high self-esteem in contrast with low self-esteem tend to have high confidence and creativity, and stronger motivation to maintain their social self in the eyes of others." Therefore, Ling et al.'s study suggests consumer characteristics including creativity, confidence, and motivation to maintain one's social self are important underlying mechanisms of the IKEA effect.
Other possible explanations for the IKEA effect have been suggested, such as "a focus on the product's positive attributes, and the relationship between effort and liking." The IKEA effect is one of several cognitive biases that seem to reflect a causative link between perceived effort and valuation.
Conceptual replication