How does the IKEA effect work and how can you use it?

The IKEA effect is named after the popular Swedish furniture giant and describes a fairly simple phenomenon classed as one of the cognitive biases. Put simply, cognitive biases are repeated, systematic errors in thinking, reasoning, decision-making and comparison. If this topic interests you, I definitely recommend reading Thinking, Fast and Slow by Daniel Kahneman, who describes System 1 and System 2 in the book. Or try the more practical and entertainingly written The Choice Factory by Richard Shotton. Both use many examples to explain the imperfections and principles of human thinking and reasoning.

People have a genetically determined tendency to value objects and goods they make, assemble or help to put together in any way more highly than products they buy ready-made. In a broader sense, the IKEA effect shows that we tend to like things more if we have put effort into creating them.

A simple example of the IKEA effect

Jirka decides he needs new furniture to improve his flat, so he orders a few pieces from IKEA online. He picks a nice table and a sofa. Like all IKEA furniture, they arrive at his home in boxes optimised to be as compact as possible. Jirka spends the whole of Saturday assembling the table and the sofa.

He works up quite a sweat, as he has not assembled any furniture for a long time and finds the instructions inadequate. Now and then he goes the wrong way and has to stop and think. He has to go back a step and take something apart again. By the end of the day it is finished, and Jirka still feels a sense of satisfaction as he falls asleep that night. Over the following days he walks past his new furniture and feels much prouder of it than if he had moved into a flat with exactly the same furniture. He also tells people at work about his success and exaggerates the effort the assembly took.

Some time later, Jirka is moving house and decides to sell the furniture. When he finds out how much he could get for it, he decides to take it with him instead. The price seems too low, and he has developed a certain attachment to the furniture. He values the effort he put into assembling it.

Fun fact: The Czech Republic is a country of cottages and weekend cabins that their owners have lovingly built up from scratch. Owners often do not sell these cottages, even when they no longer use them. The reason is the IKEA effect, which stops them from selling a temple they built with their own hands for a few thousand CZK (the market price).

Empirically tested

In another experiment, one group of participants was asked to make origami (the builders, or creators) and a second group was asked to look at what the first group had made (the non-builders). You can probably guess how it turned out. What fascinates me, though, is the size of the difference. As in other experiments, the builders valued their creations 360% more than the non-builders, who attached almost no value to the origami.

Another perspective on the IKEA effect

Because of the IKEA effect, we are willing to pay more for experiences that require more work from us, such as assembling furniture ourselves rather than buying it ready-assembled. These experiences can be valuable and enjoyable, but they can still lead us to overspend and overvalue these products. The IKEA effect can also give us a distorted idea of how good a job we have done on something we worked hard on, and make us overconfident. Companies that use the IKEA effect in advertising try to work with exactly this sense of satisfaction after assembling a product and the tendency to overvalue it.

Disadvantages of the IKEA effect within companies

The sunk cost effect: people keep putting resources into failing projects they have already invested time in, because they have become attached to them. They are unable to respect instructions or objective reasons.
“Not invented here” syndrome: people refuse to use perfectly good ideas developed elsewhere, for the benefit of their company (or even their own benefit), and prefer often worse ideas developed internally.

Common mistakes when you try to use the IKEA effect

• Asking for effort without giving control. Repetitive work that changes nothing about the result feels like a chore, not a creation. People value what they shaped, not what they merely processed.
• Letting people fail. The effect depends on a finished result. If customers cannot complete the task, the effort turns into frustration, and they may blame your product rather than themselves.
• Using it to cover weak value. Self-assembly or customisation will not rescue a product people did not want in the first place.
• Ignoring your own bias. If you built the strategy, the website or the campaign yourself, you will probably rate it higher than an outside observer would. Ask someone who did not work on it.

Benefits for companies

Companies that want to increase their profits can use the IKEA effect by charging unnecessarily high prices for a product, even though the customers take on the cost of assembling it themselves. It is also more advantageous for companies logistically, which is what led to the rise of selling unassembled furniture. With this move, IKEA brilliantly optimised its product within the marketing mix and became a trendsetter in the industry. Some businesses, such as IKEA, have business models built around getting us to pay for our own work.

The IKEA effect is very similar to another cognitive bias called the endowment effect, where people value things that belong to them more highly, or even things they merely feel they own. One study found, for example, that a chocolate bar only needs to sit near people for 30 minutes for them to value it more. In one respect, however, the two cognitive biases differ.

A fairly large proportion of people make a mistake when assembling their first piece of IKEA furniture. Most mistakes are not fatal and can be fixed, but sometimes the assembly ends with people having to call in someone handier, or even ruining the product.

The IKEA effect from a psychological perspective

Naturally, we like the feeling that we know what we are doing. That we can handle the tasks we are given and deal with the obstacles that come up. Nobody likes feeling stupid or incompetent.

In fact, our perception of our own efficacy (the belief in our own ability to function well and to be in control of our lives) is an important part of our overall mental health. People who believe in their own efficacy cope better with challenges, recover faster from failures or setbacks, and are less prone to stress and depression.3 They are also more intrinsically motivated, which means they are motivated to do things because they find them naturally enjoyable or interesting, rather than working only for some external reward.

When we do things such as assembling a piece of furniture or baking a cake, it boosts our sense of self-efficacy and competence. Not only does it feel good at the time, it also fulfils a deep psychological need. This is partly why we see objects we assemble ourselves as much more valuable than they really are. What matters is the feeling that we took part in the task, even if only partly.

In the same way, craftspeople and painters often overvalue their work compared with similar products made by competitors.

Neither too easy nor too hard

Over the last hundred years, research has found that assembly that is too easy or too complicated does not help a product sell. It has to be just complicated enough. The same applies to computer games. The most popular with most people are the ones that challenge players, but which most can still finish comfortably.

Build-a-Bear offers people the “opportunity” to build their own teddy bear, while charging customers extra for the privilege of making it themselves. Farmers, in turn, offer the chance to come and pick fruit directly on the farm. Fruit like this tastes subjectively sweeter, and you certainly will not let it go mouldy somewhere.

So what is the logic behind it? One view of how labour affects valuation suggests that asking customers to take on production costs (the savings on assembling furniture, building a teddy bear, harvesting the crop) should reduce their willingness to pay and therefore lower the value of the products. The examples above suggest the opposite: when people put their own work into products, their effort can increase how much they value them. Some work is enjoyable (building a bear) and some work allows the product to gain value. Even picking fruit gives the consumer some value: in return, they get maximum control, freshness and choice.

The IKEA effect is a well-known cognitive bias used by countless marketing strategies. It is also a great example of the branding of this Swedish company, which tries to build on this cognitive bias. It is definitely worth knowing about this effect, as it most likely influences your decisions subconsciously too.

How to use the IKEA effect in marketing

When I work with clients, I treat the IKEA effect as a design question: where can the customer take part in a way that feels meaningful? A simple process looks like this:

• Find the moment of involvement. Look for a step where the customer can make a real choice, such as configuring the product, setting goals or personalising an account.
• Keep the effort small and clear. A few guided steps work better than a long form. Give clear instructions and show progress.
• Make success very likely. Test the task with real people and remove the points where they get stuck.
• Show the result. Let the customer see what they created, for example a summary of their configuration or a finished first project.
• Stay honest. Customers notice when “participation” is only a way to shift work onto them without any benefit. That damages trust in your brand.

IKEA effect examples from everyday life

Once you know the IKEA effect, you start to notice it in many places outside furniture shops:

• Meal kits. You get the ingredients and a recipe, but you do the cooking. The dinner feels like your own achievement.
• Product configurators. When you choose the colours, materials and details of trainers, a car or a laptop, the result feels more like yours than a model straight off the shelf.
• Building sets for adults. Construction toys and model kits are often valued for the hours spent building them, not only for the finished object.
• Software set-up. When you personalise a dashboard, import your data or build your first project in an app, you become less likely to leave it for a competitor.
• Team decisions. Employees who helped shape a plan usually defend it and carry it out with more commitment than a plan handed down to them.

Frequently asked questions about the IKEA effect

What is the IKEA effect?

The IKEA effect is a cognitive bias that makes you value things more highly when you have put your own effort into making or assembling them. The term was introduced by researchers Michael Norton, Daniel Mochon and Dan Ariely. It works best when the task is completed successfully.

How is the IKEA effect used in marketing?

Companies invite customers to take part in creating the product, for example through self-assembly, customisation or personal set-up in an app. This involvement makes people feel ownership and pride. As a result, they tend to value the product more and stay loyal to it for longer.

What are some examples of the IKEA effect?

Typical examples include self-assembled furniture, meal kits, build-your-own toys, picking your own fruit and configuring products online. You can also see it at work when people defend ideas or projects they created themselves, even when better options exist.

Is the IKEA effect the same as the endowment effect?

No, although they are related. The endowment effect makes you value something more simply because you own it. The IKEA effect adds the role of your own labour, so the value grows because you created or assembled the thing.