We’ve all been there: spending hours assembling IKEA furniture, sweating, struggling, but still feeling weirdly proud of our creation in the end. Even if that bookshelf leans slightly or the coffee table wobbles just a bit, it feels like a personal triumph. But why?
The answer is quite simple: because you were the one who built it yourself. This is what behavioral economists call the IKEA Effect. [1]
What is the IKEA Effect?
The IKEA Effect is, as one would expect, a phenomenon after the Swedish furniture giant IKEA, a company known for having customers assemble their own products. The term was coined by researchers Michael Norton, Daniel Mochon, and Dan Ariely, who demonstrated that people consistently overvalue their own creations because they put effort into making them. [2]
The phenomenon was developed with a study in which participants were asked to build simple items like LEGO sets or origami figures. When they were later asked how much they would pay for these self-assembled objects versus professionally made versions, the builders gave their creations a much higher price tag even when the quality was objectively lower, a trend that can be attributed to the value placed on the work that they had to put in to create the product.
The IKEA Effect is driven by a multitude of psychological mechanisms. First is effort justification: when we invest time and energy into something, we believe that it was worth it, driving us to assign more value to the result even if it is flawed. This is further reinforced with the idea of cognitive dissonance, as our brains tweak our perceptions to resolve the discomfort of having worked hard for a potentially mediocre outcome. Finally, the core tenet underlying this effect is the ownership bias: putting personal labor into something increases our sense of ownership, which automatically boosts how much we value it. Put simply, building something yourself feels like you are part of the product.
Impact on Company Strategy
The IKEA Effect has been leveraged by companies to become a powerful tool in the business world. Companies have begun designing customer experiences with co-creation in mind, especially using personalization and DIY options to increase engagement and the perceived value of a product in customer’s mind.
Nike, for example, launched their Nike By You program that lets customers design their own sneakers. Starbucks offers hundreds of custom drink combinations. Mobile games often let you build your own avatar to keep you emotionally hooked. In the end, customers are often willing to pay more for something they helped design.
A Potential Problem?
Though companies can make great use of the personalization and do-it-yourself aspects of these strategies, the IKEA Effect can backfire. It can lead to overconfidence in poor work; people may ignore critical feedback or hold onto inefficient solutions simply because they made them. Companies might keep old systems alive just because they were “built in-house” and teams may resist change due to emotional attachment to previous work, blinding themselves to better alternatives.
Recognizing this bias is key in both the personal and professional world settings. Sometimes, one needs to step back and ask: Is this really valuable, or do I just love it because it’s mine?
Conclusion
The IKEA Effect exemplifies that humans aren’t entirely rational decision-makers; rather, we’re emotional creatures who attach value to the effort that we put in. The effect serves as an example of how psychological biases shape real-world economic behavior, showing that that subjective value can be inflated by personal effort, leading individuals—and even firms—to misjudge the true worth of goods, services, and ideas. In the end, the IKEA Effect reminds us that perceived value is not always the same as objective value—understanding this idea is critical to make better decisions in all aspects of personal, social, and professional life.
Sources
[1] https://thedecisionlab.com/biases/ikea-effect
[2] https://www.hbs.edu/ris/Publication%20Files/11-091.pdf
[3] Photographer: Brandon Bell/Getty Images