112. The IKEA Effect and Effort Heuristic, a Behavioral Economics Foundations Episode

<p><span style="font-weight: 400;">On today’s behavioral economics foundations episode we are going to be talking about the IKEA effect as well as the effort heuristic. I’ve loved the IKEA effect concept since the moment I heard its name. It is such a quirky title, but so clear for what this concept is all about. </span></p> <p><span style="font-weight: 400;">In its most basic form, we value things that we put effort into more than things we don’t. I’ll talk more about the details and nuances as we go through the episode and there are many more ways to use this concept than assembling your own furniture.</span></p> <p><span style="font-weight: 400;">We take a look at ways the IKEA effect plays out in our lives as well as our businesses.  The IKEA effect doesn’t just have to be used for product businesses. The IKEA effect can play a huge role in change management.  Tune in to learn more about the IKEA effect and how it impacts our lives and businesses.   </span></p> <h3><span style="font-weight: 400;">Show Notes:</span></h3> <ul> <li style="font-weight: 400;"><span style= "font-weight: 400;">[00:58] In its most basic form, the IKEA Effect is that we value things that we put effort into more than things we don’t.</span></li> <li style="font-weight: 400;"><span style= "font-weight: 400;">[03:52] The core of this concept is that when people have an opportunity to build something themselves and when they put some effort in, they will value that thing higher than something they didn’t build. </span></li> <li style="font-weight: 400;"><span style= "font-weight: 400;">[04:30] Some studies have attributed this to the pride felt when assembling something yourself, and that is part of it, but it isn’t the whole story.</span></li> <li style="font-weight: 400;"><span style= "font-weight: 400;">[05:19] The</span> <strong>endowment effect</strong> <span style="font-weight: 400;">is the phenomena in our brains where simply owning something causes us to find more worth in it than what other people see in it, or in its stated pric