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Who's in the Video

Dan Ariely

Dan Ariely is the James B Duke Professor of Psychology and Behavioral Economics at Duke University. He is the founder of The Center for Advanced Hindsight and co-founder of BEworks,[…]

Ariely’s “IKEA effect”: Not only do we like things that we make more than similar things made by others—but we think other people should value them more as well.

Question: Why do we attach more value to things we create rnourselves?
rn

Dan Ariely: I don’t know if you’ve had the experience of rngoing to IKEA, but I go from time to time and the last thing I did was Irn built a toy chest for my kids.  And when I got home with this box, rnactually a set of boxes, and I start assembling them, for me, the rninstructions were very unclear, and I kept unscrewing things and rnscrewing them wrongly and had to disassemble and put it back together rnand so on.  By the end of the day, I worked a lot, it was not a rnparticularly beautiful piece of furniture, but I was actually quite rnattached to it.  And I think that’s kind of the interesting idea, is rnthat when you put a lot of yourself into it, some sweat and energy and rnanger and maybe even frustration, you end up loving the end product a rnbit more.

So we tried to do this experiments and we got people torn build Legos and origamis and all kinds of things.  And the first thing rnwe found was if there was an origami that you built and an origami that rnsomebody else built, you think that yours is much, much more beautiful. rn Not only is it more beautiful, you’re willing to pay much more for it, rnright?  Now the question is why?  You can imagine, I built an origami rnthat is uniquely good for me and you, the other origami is not, so it’s rnunique to me, it’s not about the fact that I kind of wrongly value it, rnit’s just that it has some features that I particularly like.

rnSo we asked people to predict how other people would pay for it and rnturns out people are really wrong with it.  Not only do we like more thern origami we make, we think other people would love them as well.  And rnyou can think about kids like this, right?  I have two wonderful kids, Irn love them dearly, I think they’re amazing.  When we go to a party and rnthey dance or do something, I can’t believe that any of their parents rnwould want to do anything but look in my kids, right?  And that’s the rnissue, right?  They are my kids, I think they are wonderful, but, not rnonly that, I think that other people should see them as wonderful as I rnsee them.  And the same thing happened with origami or with everything rnwe make, not only do we overvalue it, we think that everybody will sharern our perspective.

And this, of course, creates both opportunitiesrn for better things and opportunities for mistakes, right?  So if you’re arn company and you can create things that people would actually put rnsomething of themselves into it and actually value it more, that’s a rngreat thing to do, right?  There’s lot of opportunities for tailoring rnand custom made and user designed on the Web.  It’s also about cooking rnfor yourself and doing your own garden and fixing things yourself rnbecause we might not understand it if we do something of ourselves we rnwould like it more, but the fact is, we likely would do the same thing. rn But of course, there’s the down side and the down side is if we create rnsomething, we end up loving it, perhaps too much, and we don’t see it inrn an objective way and as a consequence, we can make mistakes as well.  rnAnd that’s actually a general comment about rationality and rnirrationality.  Rationality... irrationality is not always bad, it’s notrn always that a rational person is better than irrational, it’s a rnmixture, right?  It’s really wonderful that we can love our kids so rnmuch, that's why they actually get to live and we care about them.  But rnat the same time, our blindness to them or to the weaknesses can rnactually create some negative consequences as well.

Recorded on June 1, 2010
Interviewed by David Hirschman