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November 18, 2011 / Simon Thorne

Creation Can Negate Objectivity – The IKEA effect

Last week we had our results from our first round of blogging.  Although my results were good, I wanted better. Not only did I want better, I thought I deserved better. Why? After all the grades I received were of a high standard, and based on my grades from undergraduate I should be over the moon with what I had achieved. Earlier in my blogging I talked about the bias ownership causes. Maybe this is what left me wanting more, but thinking about it, there is probably more to it than that. Not only am I dealing with ownership bias, I am suffering from something Ariely terms the “the IKEA effect”. As I created this blog, does this cloud be objectivity? Not only does this affect my judgment, but also it has been used to revolutionize the home baking industry. The combination of ownership an the IKEA effect can go a long way to explaining why people over value their homes so much, especially when they have been customized to suit themselves. We will also be taking a look at how marketers can capitalize on the IKEA effect to draw in customers.

First of, lets explore how creating something can raise our valuation of that item. Ariely and his colleagues, Michael Norton and Daniel Mochon, used an experiment in which participants created origami animals. If you have the book he includes detailed instructions in how to make the origami birds and frogs, I don’t know how any of his participants managed it as I end up with a crumpled paper ball… Participants were given the instructions and told that upon completion they would be given the opportunity to bid for their creation. They bid against a computer using the Becker-DeGroot-Marschak procedure, in which after the participants bid, it would generate a random bid. If the participants’ bid were higher they would pay and get to keep their creation. The Becker-DeGroot-Marschack procedure is often used to measure people’s willingness to pay.

Two conditions were used; the creator would have the opportunity to bid as well as a non-creator, usually a passer by. On average participants in the creator condition bid 23cents for the privilege of owning there handcrafted origami monstrosities. While non-creators saw the origami for what it was, a poorly crafter amateurish crumple of paper and bid, probably a more accurate, measly 5cents. This becomes even more interesting when you compare the creators bid’s to what the non-creators bid for a piece of origami crafter by an expert. Now the non-creators were willing to pay 27cents for the origami. So, were the people in the creator condition seeing their creations almost at expert standard?

Looking at these results, creating something conflicts and objectivity you may have towards you work. We tend to overvalue our own creations. So how can this be used to sell to people? CUSTERMIZATION! A few years ago I stumbled upon the converse website, where you can design your own shoe. I started my creation, picking different coloured soles, laces, everything. In the end I decided not to buy it, because I had little money at the time and thought it was better spent on alcohol. These design your own shoes can become very expensive very quick. But as we saw in Ariely’s study we overvalue our creations, therefore Converse can charge exuberant prices for their custom shoes, because we value them that much more. Looking at the world of automobiles we see the same things with customizable colours, and parts. In the end we pay a lot for the privilege to customize. Lets not forget the effect’s namesake, IKEA. The Swedish furniture DIY store has had huge success in the build it yourself approach. After we have spent an hour trying to find that piece they forgot to include, and struggled with the confusing instructions do we not step back and think, Look what I have created! We then connected with that piece of furniture, it has part of us in it so we will look more favourably on it and incidentally look on IKEA more favourably. Leading to its continued success.

Do you like cakes? I do. But who has the time anymore (or in my case, space) to weigh out all the ingredients, follow a recipe and put an hour or so aside to bake from scratch? Not many people can afford that luxury. Betty Crocker and other baking mixtures are now hugely successful. But when Baking Mixtures first came onto the scene, people didn’t buy them. They didn’t feel as if they could just put everything in, and claim they had made the delicious cake. Therefore what did the Baking Mixture industry do? Well they took something away. Take out one or two ingredients and the mixtures started flying of the shelves. Why? Because the “Just add an egg” resulted in consumers feeling like they had created the cake, they had enough input to claim it as their own.

I think many of us are prone to overvaluing what we create, and we probably all have things that are special to us because we created them. Will not all parents tell you that their children are amazing & special? Odds are they’re not all that special. Do you have pieces of furniture, jewelry and other things that you hold in high esteem simply because you created them? Looking at things you have created, are they really that good?

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5 Comments

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  1. adception / Nov 19 2011 3:09 am

    Hi Simon,

    From my point of view your blog is really interesting. I love IKEA and the picture of that yummy chocolate cake, but this isn’t the reason why I enjoyed reading it.

    I was quite surprised about the fact to take out some ingredients of the cake to get the feeling to make it on your own; it is quite brilliant to me. I never thought about it, but it makes total sense to me. And it is the same with the IKEA stuff.

    Alright, I like your blog, because it makes me remembering a funny story with my mum: Some time ago I bought a PAX-cupboard from IKEA, a huge cupboard with slide doors and windows. The packaging was huge! But after buying it I had to travel and I couldn’t set it up by myself, so when I was on this trip my mum and dad came into my flat and decided to do it for me as a surprise, in that moment they didn’t know that they would regret it forever ;). They told me, it was so hard to build it up, because the instructions were so difficult and there were so many nails and screws and different other parts. And there were sticker on the window so my mum had to scratch it away, she scratched until she had blood under her fingernails. The needed 2 days for it. After my exhausting trip I came back home, a little bit stressed and angry. Of course I was very happy about the cupboard and wanted to thank my mum for it, but then she started to complain how difficult it was and how horrible, and her nails, and… I think she just wanted to show me how much work is in the cupboard, but I was so tired and stressed that I just say: “No one asked you to build it up for me, I could do it by myself!” That was a horrible mistake! We had a discussion about over an hour. The next time, when I went on a trip and came back home my whole cupboard was removed and disassembled into its individual parts. I get what she wanted to show me with it, but at that point I thought this was quite stupid and infantile ;), so I just gave her a paper about “The Development of Independence: A Comparative Study” written by Leonore Boehm (1957), while I was building it up. At the end she helped me again and it took all night long to have the same cupboard. But still it was a really good night with chatting and drinking wine, a good mother-daughter-experience 🙂 So even when I don’t want to have kids, I would do the same like my mum, it was a good lecture for me and for her as well, for me she is the perfect role model. And now we are perfectionists in building IKEA-cupboards (Flett et al. 2002).

    Oh, and I just forgot to tell something: I can’t make Origami birds as well, but I can do Origami tulips, unless I don’t forget it, I can make one for you in the next lecture, so you can give it to Caroline as a gift and maybe you gonna get your desired grades 🙂 So remind me on Monday!

    References:

    Boehm, L., 1957. The Development of Independence: A Comparative Study. InChild Development.
    Vol. 28, No. 1 (Mar., 1957), pp. 85-92

    Flett, G.L., Hewitt, P.L., Oliver, J.M., Macdonald, S., 2002. Perfectionism in children and their parents: A developmental analysis. In G. L. Flett & P. L. Hewitt, eds. Perfectionism: Theory, research, and treatment. Washington, DC, US: American Psychological Association, pp. 89-132. Available at: http://content.apa.org/books/10458-004

  2. Lynn / Nov 23 2011 8:34 am

    Very interesting. I also think that people also like to think they have something no one else has, therefore if you create it, it is more likely to be unique. Thus more valuable

  3. jolleys / Nov 24 2011 1:16 pm

    I think this links in nicely with the idea of keeping products due to sentimental value – I know for a fact I do this! It has been found that people hoard items due to things like sentimental value, so this could also be a reason that we feel things that belong to us are better! I mean, an engagement ring would mean far more to you than to the jewellery dealer! Although we generally don’t hoard things like bookcases, the principle still applies to products like tickets from experiences (concert, rail etc), birthday cards and all other things in between relevant to the consumer world

    http://www.sciencedirect.com/science/article/pii/000579679500043W

  4. Chris_Shenton / Nov 24 2011 4:28 pm

    That cake mixture thing is crazy…simple and effective too! Like adception, I had never thought of it before but now you’ve pointed it out – pure genius, lower production cost, increased sales!!!

    The NFL online store utilises the same strategy as Converse. Customers can design their own t-shirts by adding team logos, player names, numbers changing colours, changing cut etc. I once played around and managed to get my base $14.99 cotton t-shirt to come out at $42.00 based on all the amendments. I guess social influence and our desire to be individualistic could easily lead many to pay!

    It may not be an overly scientific example but maybe this explains some of the seemingly idiotic people that find themselves in the Dragon’s Den. Some of these “inventors” believe their two pieces of plastic stuck together with a few nails is going to revolutionize the way we live whereas the “expert” Dragons laugh it out of the studio. Often thousands of pounds have been sunk into projects that even I can see have no future.

  5. The Wandering Consumer / Nov 24 2011 5:21 pm

    Making things such as crafts does give a personal value to products, before mass production creating your own things such as clothing and food was a necessity. Then when manufacturing came in it went out of fashion, but now it is back – big time. Haberdashery shops were nearly completely gone from the high street but now they are popular little retro shops that are not just for old ladies, people are encouraged to make their own unique items. I think it says something about you been able to afford the time and the components to make your own items, but it is only worth something if your good. Unfortunately now we don’t have the skills, we aren’t taught how to cook and sew in schools any more so these add you egg or just stick this on is just about all most people can manage. It could also just be laziness, adding an egg to the mix seems amazing to me that people pay more for that than a bag of flour and sugar just so they don’t have to weigh it themselves. But now a high quality hand knitted or crafted item is worth more than the similar mass produced items simply because individual expression is more important. Granted the things we simpletons make may not be of a high quality but if we look at the designer one offs these expensive items are seen as the most desirable because of the time and effort put into their creation.

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