13 Apr 2011Working Paper Summaries

The ‘IKEA Effect’: When Labor Leads to Love

by Michael I. Norton, Daniel Mochon and Dan Ariely

Companies increasingly involve customers in the design and assembly of products, from Converse allowing customers to design their own shoes to IKEA asking customers to assemble their own furniture. In this paper researchers Michael I. Norton (Harvard Business School), Daniel Mochon (University of California at San Diego), and Dan Ariely (Duke) use the "IKEA Effect" to explain the increase in valuation we place on products we build ourselves. The researchers discuss the implications of the IKEA Effect for marketing managers and organizations more generally. Key concepts include:

Successful assembly of products—no matter how amateurish—leads consumers to value them over and above the value that arises from merely purchasing a product.
Labor increases valuation of completed products not just for consumers who profess an interest in "do-it-yourself" projects, but even for those who express a preference for buying preassembled products.
Successful completion is an essential component for the link between labor and liking to emerge; participants who were not permitted to finish their creations did not show an increase in willingness-to-pay.
The marketing challenge lies in convincing consumers to engage in the kinds of labor that will lead them to value products more highly, especially given their general aversion to such pursuits.
The overvaluation that occurs as a result of the IKEA Effect has implications for organizations as a contributor to two key organizational pitfalls: sunk cost effects and the "not invented here" syndrome.

Author Abstract

In a series of studies in which consumers assembled IKEA boxes, folded origami, and built sets of Legos, we demonstrate and investigate the boundary conditions for what we term the "IKEA effect"-the increase in valuation of self-made products. Participants saw their amateurish creations-of both utilitarian and hedonic products-as similar in value to the creations of experts and expected others to share their opinions. Our account suggests that labor leads to increased valuation only when labor results in successful completion of tasks; thus when participants built and then destroyed their creations, or failed to complete them, the IKEA effect dissipated. Finally, we show that labor increases valuation of completed products not just for consumers who profess an interest in "do-it-yourself" projects, but even for those who are relatively uninterested. We discuss the implications of the IKEA effect for marketing managers and organizations more generally.