Polls / August 2, 2011

Do you know what the "IKEA effect" is in behavioural economics?

The “IKEA effect” is a phrase known by 39% of respondents to the latest eZonomics online poll.

The added value of do-it-yourself
The term the “IKEA effect” is used in behavioural economics to describe the increase in value people tend to put on products they make themselves compared with products that are ready-made. Behavioural economics professor and author Dan Ariely popularised the term after wondering why people may prefer to buy products that require assembly. Professor Ariely explains the effect in a video on his website. Experiments found that many people not only prefer to buy products that require time and effort to assemble but that, once completed, these self-made products tend to be valued more highly. A possible explanation is that people gain satisfaction from being involved in the creation of things. The term has its origin in the Swedish furniture and housewares group IKEA which provides products as components that are assembled by the purchaser. More recent research on this is given in a 2011 paper by Ariely and others.

When do-it-yourself loses value
For all of the benefits of self-assembly, the “IKEA effect” may also have costs. The most recent research notes the effect may be lower for more expensive goods and complicated tasks such as in home improvement. The researchers wonder if “people may see the improvements the have made to their homes – such as the brick walkways they have laid by hand – as increasing the value of the house far more than buyers, who see only a shoddily-built walkway”.

Bias

eZonomics team
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