Rockets, IKEA and satisfaction

Have you ever assembled a piece of flat-pack furniture? Did you get a feeling of achievement when it was finished (even if you had a few screws left over)? It turns out people value things more when they have had a hand in making them.

For a while last summer, my five year old son’s favourite toy was a Lego rocket that he made himself. Objectively, it wasn’t a very good rocket. It wasn’t pointy, it had unglazed French windows for a door and it was kind of square at the base. But to my son, it was the best toy rocket in the world because he made it. For a couple of months, it had it’s own shelf in his room and no-one (especially his big sister) was allowed to touch it.

In 2011 a group of Psychologists and Behavioural Economists from Harvard, Yale and Duke Universities devised a set of experiments to test this effect. Coming back to flat pack furniture; there was a study in which two groups of students were given the same IKEA book case. One group was asked to build it themselves and the second was given their book cases already professionally assembled. Then both groups were asked; “If you were listing your bookcase on eBay in 12 months, what price would you set?”

The group that built the bookcases themselves (often quite badly) set higher prices. They valued the work they had put in. They were more committed to their bookcases and couldn’t conceive of selling them cheaply. The scientists named this “The Ikea Effect”

You can use the Ikea Effect to get more from your negotiations.

When you make proposals in negotiation, and the other side counter-proposes, they are investing work in the outcome. This investment causes them to value the deal more highly. The more work they put in, the more committed they become to closing on a deal.

This means that, even if the deal isn’t the greatest for them, at the end they care about making it happen and can derive satisfaction from closing the deal even though they may wish they had got more out of it.