The IKEA Effect

Identified in 2011 by Michael Norton (Harvard Business School).

The IKEA Effect is a cognitive effect that refers to our tendency to attach a higher value to things we help create.

Combining the Ikea Effect with other related traits, such as our willingness to pay a premium for customization, is a strategy employed by companies seeking to increase the intrinsic value that we attach to their products.

• This is using Cognitive Bias to exploit customers

For instance, American retailer Build-A-Bear Workshop is anchored around creating a highly interactive customer experience. With the help of staff, children (or adults) can assemble their stuffed animals from scratch, then add clothing and accessories at extra cost.

Nike also incorporates this bias into its offering. The footwear company offers a Nike By You line of customizable products, where customers pay a premium to design bespoke shoes with an extensive online configurator.

While there’s nothing necessarily wrong with our susceptibility to the Ikea Effect, understanding its significance may help us make more appropriate decisions as consumers.