EconTalk · Russ Roberts

The Economics of Scarcity and the UNC-Duke Basketball Game (with Michael Munger)

March 16, 2026·1 hr 6 min·4 clips

K-Ville's 58-question trivia exam — including 'who did Duke play in a secret scrimmage and what was the score?' — is not a knowledge test but a loyalty filter, a modern version of the Chinese imperial civil service exam that required calligraphy of poetry with no job relevance.

1. EconTalk host Russ Roberts interviews Michael Munger, Duke faculty member and economics professor, on the economics of scarcity using Duke-UNC basketball ticket allocation as the central case study. 2. Munger is making his 51st EconTalk appearance, and the episode airs on March 16th, 2026, marking the 20th anniversary of EconTalk's first episode. 3. The episode uses Cameron Indoor Stadium's Duke-UNC game tickets — among the most sought-after in American college sports — to illustrate core economic concepts about allocating goods when demand exceeds supply. 4. Cameron Indoor Stadium holds 9,000 people, with a 1,200-seat student section (Section 17) immediately courtside and considered the best seats in the house; StubHub prices for those seats run $1,100 to $9,000 per ticket for the Duke-UNC game. 5. Duke has 6,000 undergraduates competing for 1,200 student seats priced at zero, creating guaranteed structural excess demand for a premium game against rival UNC, located 9 miles away in Chapel Hill. 6. Michael Munger introduces Adam Smith's definition of the 'real price' from Wealth of Nations Book 1 Chapter 5 — the toil and trouble of acquiring something — and illustrates it with Starbucks surge pricing: a $7 latte in a 20-minute line costs $7 plus 20 minutes. 7. He lists the four mechanisms for allocating scarce goods: raise the price, queuing (first-come, first-served), random lottery, and authority or discretion, noting each has characteristic disadvantages including deadweight loss for queuing and potential discrimination for discretion. 8. Roberts poses a thought experiment: announce exam answers to the first five students at your door at midnight — when does the line start, and what happens if you add comfortable massage chairs with full music libraries? The chairs reduce discomfort and therefore extend waiting time, illustrating that improving queue conditions increases deadweight loss rather than reducing it. 9. K-Ville began in 1986 when Kimberly Reed and friends, mid-quarters game, rented a U-Haul party tent and set it up outside Cameron Indoor without asking permission; Duke administration allowed it, which established the precedent that became a 40-year tradition. 10. Once tents were permitted, the equilibrium waiting time extended from one overnight to six weeks — exactly the prediction of the comfortable-chair thought experiment — as students competed for advantage by arriving earlier. 11. K-Ville now has a student-written constitution ratified annually by Duke Student Government, a three-tier tent hierarchy (black, blue, white), and a dedicated line monitor corps that enforces check-in rules with midnight air horn alarms requiring a third of each tent's occupants to respond within five minutes. 12. Black tent eligibility requires passing a 58-question, 14-page trivia exam covering detailed Duke basketball facts including the location, opponent, and final score of a secret pre-season scrimmage — knowledge Munger describes as 'memorizing something stupid.' 13. Munger connects the K-Ville exam to George Akerlof's loyalty filter literature: the Chinese imperial civil service required candidates to write classical poetry from memory in beautiful calligraphy, a skill orthogonal to governance, selecting for willingness to invest effort in something irrelevant as proof of intense commitment. 14. Border guards — line monitors forming a human perimeter — prevent ringers from entering K-Ville during check-ins; barcoded wristbands and student ID matching make substitution very difficult, though Munger acknowledges a $10,000 bribe to a line monitor might work. 15. Roberts notes that K-Ville's document for participants actually advises on which chairs are best for studying while tenting, which unintentionally mirrors his comfortable-chairs thought experiment almost exactly. 16. Munger draws the contrast between Duke's general revenue-maximization behavior — $75,000 annual tuition, high food and housing costs — and its choice to give away what may be the most valuable per-seat athletic ticket in college sports, forfeiting millions annually. 17. Munger argues that below-market ticket pricing for student sections serves a sporting purpose: devoted fans provide genuine home-court advantage, and the Duke student section's noise level, creativity, and sustained intensity during games demonstrably affects outcomes. 18. Roberts adds a Chilean price control example to illustrate queue entrepreneurship: two young men posted a sign advertising televisions at controlled prices in a store window, waited for a line to form, and sold their spots in the line at high prices. 19. The episode's tone is intellectually playful and warm — Munger's 51st appearance with Roberts creates an easy conversational dynamic where both share jokes and push back on each other's framings. 20. Economics students, sports fans interested in institutional design, and anyone curious about how organizations allocate things other than with money will find the episode rewarding; listeners expecting a pure sports-talk episode may find the economic theory segments dense.

As heard by us

A Duke-UNC rivalry story becomes a sharp look at queues, student-made rules, prices, and scarcity as social life.

Scarcity comes into focus as Michael Munger uses the Duke-UNC rivalry to examine prices, rationing, queues, and belonging. His account of Kayville, the annual student-run tent village with its streets, lights, customs, constitution, police force, and appeals process, gives…

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Press play when a Duke-UNC rivalry sounds like a surprisingly good lesson in lines, prices, rationing, and community.

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