The IKEA effect is named after the popular Swedish furniture giant and describes a relatively simple phenomenon classified as cognitive bias . Cognitive biases are, in simple terms, repeated systematic errors in thinking, reasoning, decision-making and comparison. If you are more interested in this topic, be sure to read Thinking: Fast and Slow by Daniel Kahneman , who describes System 1 and 2 in the book. Or the more practical and entertainingly written book Anatomy of Decision Making by Richard Shotton. They explain the imperfection and principles of human thinking and reasoning with many examples.
People have a genetic tendency to value objects and goods that they make, assemble, or otherwise participate in assembling more than products that they buy ready-made. In a broader sense, the IKEA effect suggests that we tend to like things more if we have put effort into creating them.
A simple example of the IKEA effect
Jirka has decided that he needs new furniture to improve chinese overseas australia database his apartment, so he orders some furniture from IKEA online. He chooses a nice table and a sofa. Like all IKEA furniture, Jirka will receive the boxes that are as small as possible. Jirka will spend the whole Saturday assembling the table and sofa.
He sweats a lot because he hasn’t assembled any furniture in a long time and the instructions don’t seem adequate to him. Sometimes he takes the wrong path and has to think about it. Go back one step and disassemble something again. At the end of the day, it’s done and Jirka feels a sense of satisfaction even when he falls asleep at night. In the following days, he walks around the new furniture and is much more proud of it than if he had moved into an apartment with exactly the same furniture. He also talks about his success at work and exaggerates the effort he put into assembling the furniture.
A simple example IKEA effect
Some time later, Jirka moves and decides to sell the furniture. When he finds out how much he could sell the furniture for, he decides to move. The price seems too low to him and he has a certain attachment to the furniture. He appreciates the effort he put into assembling it.
Interesting fact: The Czech Republic is a country of cottages and chalets that their owners have been tinkering with since the very beginning. These cottages are often not sold by the owners, even if they are not using them. The reason is the IKEA effect, which prevents them from selling a self-made temple for several thousand (market price).
Empirically tested
In another experiment, one group of participants was asked to create origami (builders, creators), and the other to view the first group’s creation (non-builders). You can probably guess how that went. But what’s fascinating to me is the difference. Similar to other experiments, the builders valued their creation 360% more than the non-builders, who placed almost no value on origami.
Another look at the IKEA effect
The IKEA effect makes us willing to pay more for experiences ultimate guide to b2b marketing in japan that require more work , such as assembling furniture ourselves instead of buying it pre-assembled. These experiences can be rewarding and fun, but they can also lead us to overspend and overvalue these products. The IKEA effect can also give us a distorted view of how good a job we’ve done on something we’ve worked hard on, causing us to become overconfident. Companies that use the IKEA effect in advertising are trying to capitalize on this sense of satisfaction after completing a product and overvaluing its price.
Another look at
Sunk cost effect – people continue to devote resources to unsuccessful projects in which they previously invested time because they have developed a relationship with them. They are unable to respect regulations or objective reasons.
“Not invented here” syndrome – people refuse to use perfectly good ideas developed elsewhere for the benefit of their own company (or even their own benefit), often worse ideas developed internally.
Benefits for companies
Companies looking to increase their profits can exploit the IKEA effect by charging unnecessarily high prices for a product, even if the customer bears the cost of assembling it themselves. IKEA has done a great job of optimizing the product within the marketing mix and has become an industry trendsetter. Some companies, such as IKEA, have business models that focus on us paying for our own work.
The IKEA effect is very similar to another cognitive bias called thailand data the endowment effect, where people value things they own more—or even just feel like they own them. For example, one study found that people value a chocolate bar more after just 30 minutes of sitting around. However, the two cognitive biases differ in one way.
A fairly significant number of people make a mistake when assembling their first piece of IKEA furniture.