With a name inspired by the Swedish self-assembly furniture giant, this effect can help explain the growing popularity of ‘meal-kit’ services; the trend towards co-designing solutions in business; and house-hunters repeatedly paying top dollar for ‘fixer uppers’.
The IKEA Effect is a cognitive heuristic or bias that leads you to overvalue things that you’ve helped to partially create.
IMPLICATIONS FOR YOU.
This effect is quite intuitive. You’ve likely experienced the hollow feeling when something was simply handed to you, compared to the satisfaction of truly earning it. In addition, helping to create something can contribute to your self-beliefs of competency and impact.
In practical terms, the IKEA Effect can lead you to pay more for products that have a do-it-yourself element. Linked to that, the effect will lead you to overvalue those items once they have been constructed. See the Origins tab below for the fascinating Origami example from the paper that coined this term.
Dan Ariely, one of the originators of the term pushes the effect to its extremes, pointing out that if you have children, they generally represent “the ultimate IKEA Effect.” That is, you will value your own child, who you’ve put tremendous effort into over years, more than an equivalent child that you’ve not invested in. The IKEA Effect also explains why you tend to believe that everyone else should value your children as much as you.
IMPLICATIONS FOR BUSINESS STRATEGY.
Running a business or launching a new product? Consider how you might charge higher prices for assembly-based products, even though consumers are investing their own labour into the product’s completion. Importantly, this effect goes beyond the simple personalisation of choosing colours or options in a product, and instead must involve tangible effort to help create or build it.