The Downside of the IKEA Effect

The Downside of the IKEA Effect
(AP Photo/Matt Rourke)
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This holiday season, a great many people will unwrap conspicuously large presents to find furniture from IKEA. But as anyone familiar with the Swedish-born multinational conglomerate will know, assembly is required. Thus begins the gift receiver's exposure to a curious cognitive bias: the IKEA effect.

First scientifically documented back in 2011 by Michael I. Norton of Harvard Business School, Daniel Mochon of Yale, and Dan Ariely of Duke, the IKEA effect describes consumers' propensity to overvalue things or ideas that they created themselves. In their study, Norton, Mochon, and Ariely had subjects construct a box from IKEA, then asked them to bid on a box they built or a pre-built box. If their bid was higher than a random number, they could keep the box. Subjects ended up bidding 62% more on average for their own boxes. This result, showing that subjects valued their creations more than others – even though the other objects were often of objectively better quality – was replicated with origami and LEGO sets.

In 2017, a team of researchers from the United Kingdom and Germany published a study which found that kids as young as five are biased by the IKEA effect, hinting that this psychological quirk affects our thinking for most of our lives.

Some companies use this to their advantage. A few restaurant chains simply make ingredients available for consumers and let them build their own meals (with some guidance). This allows those chains to cut down on cooking-associated costs like energy and labor.

The IKEA effect is generally pretty harmless, but it can cloud our thinking in a few key circumstances. For starters, it undoubtedly contributes to the notorious sunk cost fallacy, in which humans will persist in following a risky course or poor decision if they have already invested significant time or resources into it. Imagine a person continuing to drive an unsafe car, simply because they repaired and upgraded it numerous times at great cost.

The IKEA effect can also lead otherwise intelligent individuals to misappraise their own creations. Directors, producers, and actors might be certain that they have crafted a thrilling film that audiences will love, when in fact it's destined to bomb. Homeowners can sink lots of time and money into building and retrofitting their houses to their liking, but eventually realize when trying to sell that buyers are not as enamored as they are.

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