Intro. [Recording date: January 4, 2026.]
Russ Roberts: It’s January 4th, 2026, and I have the pleasure of welcoming back Michael Munger. This marks Mike’s 51st visit to EconTalk, having last graced us with his insights in July 2025, discussing capitalism.
Assuming everything goes according to plan, this episode will air on March 16, 2026—exactly 20 years since the inaugural EconTalk episode.
With an average of 2.5 appearances per year, Mike’s contributions have been invaluable in shaping the program. Thank you, Mike, for your continued support. Welcome back to EconTalk.
Michael Munger: It’s a true pleasure to be here again.
Russ Roberts: Today, we’re diving into several intriguing topics: emergent order, the power of prices, rationing mechanisms, the significance of community, and one of college sports’ fiercest rivalries: Duke versus UNC [University of North Carolina].
For those unfamiliar with this rivalry, we need to provide a bit of background on the Duke-UNC basketball face-off, focusing particularly on how tickets are allocated at these institutions and exploring alternatives. Given Mike’s tenure at Duke, let’s hear his thoughts on this intense rivalry and the complexities surrounding ticket distribution.
Michael Munger: I’m thrilled to discuss this topic! Basketball holds a special place in North Carolina, alongside states like Kentucky and Indiana. While I won’t claim North Carolina is the best, it certainly ranks high in the significance of college basketball over professional leagues.
During my undergraduate years at Davidson College, we consistently faced Duke—and let’s just say, the outcomes were less than favorable. After transferring to UNC, I was fully immersed in the passionate rivalry with Duke. To many, the Duke-UNC game transcends sport—it’s seen as a battle between good and evil, with both sides fervently believing they represent one or the other.
This rivalry has created a high demand for tickets, with prices reflecting that fervor. The Dean Dome at UNC accommodates around 14,000 to 15,000 fans, including about 6,000 students, making it feasible to attend a game—albeit at a steep cost.
As for Duke, the iconic Cameron Indoor Stadium seats only 9,000, with a student section of around 1,200. I took a look at StubHub for ticket prices, and it’s astonishing: nosebleed seats can go for $2,200, translating to $1,100 per ticket, while better seats might command a staggering $9,000. Such prices highlight the immense value placed on attending what some consider the pinnacle of college basketball experiences.
Russ Roberts: Just to clarify, UNC is in Chapel Hill, which is about how far from Durham, where Duke is located?
Michael Munger: It’s approximately nine miles as the crow flies, or about eleven by road. This proximity fuels the rivalry’s intensity. Duke is a private institution, while UNC is public. I was a faculty member at UNC when I transitioned from Texas, so it’s a rivalry I understand well.
Russ Roberts: Our shared backgrounds offer a rich perspective on the rivalry. The ticket demand for this game is extraordinarily high, and the universities face a dilemma: how to allocate more tickets than available seats. The prices you mentioned from StubHub reflect the secondary market. Can students sell their tickets there?
Michael Munger: Not at all. Students are restricted from selling their tickets, with mechanisms in place to enforce this. To gain entry, they must present a student ID and a wristband verifying their registration, preventing any resale of student tickets.
My mention of StubHub was merely to illustrate the shadow price of these tickets. Back in 2006, a student named Tristan Patterson attempted to sell his student ticket for $3,000 via Craigslist, claiming he’d provide his ID for entry. He ended up being kicked out, emphasizing the difficulties students face in attempting to sell their tickets. Successful resales are likely never recorded, highlighting a significant barrier.
However, adults can easily sell their tickets on StubHub.
Russ Roberts: The distinction between student and general tickets is crucial, and I look forward to exploring why that is. Interestingly, Duke and UNC have adopted different strategies for ticket allocation. They both rejected the obvious option: charging a high price. By not doing so, they’re potentially sacrificing millions of dollars.
So, neither school charges for tickets outright, creating a situation where the demand from students far exceeds the available supply. At Duke, with only 1,200 seats allocated to students, there’s a significant crowd vying for those spots, while UNC employs a lottery system for ticket distribution. Let’s focus on Duke’s unique approach. Can you shed light on it?
Michael Munger: In preparing for our discussion, I delved deep into this topic. Adam Smith famously stated in *The Wealth of Nations* that the real price of anything includes the toil and trouble of acquiring it. I often challenge my students by asking if Starbucks utilizes surge pricing, and they typically respond negatively, associating it solely with Uber.
However, I argue that Starbucks embodies surge pricing because the line length contributes to the cost of that $7 latte. If you see a lengthy line, the actual cost is the price plus the time spent waiting. Thus, if obtaining a latte were free, the wait would be long. Nothing is truly free when demand exists.
Economists describe scarcity as a condition where demand outstrips supply at the current price. When scarcity arises, the question becomes how to allocate limited resources. Traditional solutions include raising prices, queuing, using a lottery, or exercising authority. Each of these approaches comes with its downsides.
While raising prices is the most straightforward solution, it seems Duke has chosen a different path. The university maximizes revenue across various channels—tuition, housing, and food—but paradoxically gives away the most sought-after athletic tickets for free.
By offering tickets at no cost, they inevitably create scarcity, prompting the need for alternative allocation methods. A lottery could minimize deadweight loss, but instead, Duke employs a queuing system, which has morphed into a bizarre tradition.
Russ Roberts: Indeed, let’s delve into how this queuing system operates and its repercussions. To illustrate, allow me to present a hypothetical scenario I often pose to my students. If I announce that I will distribute final exam answers to the first five students who arrive outside my door at midnight before the exam, what might unfold?
First, when would students line up? Definitely not minutes before midnight; they’d arrive much earlier to secure a spot. Secondly, how long would the line be? Logically, it would consist of only five people, as anyone beyond that wouldn’t see the point in waiting. However, the real question is: How long before midnight would they need to arrive?
Lastly, let’s consider a twist: if I provided five luxurious recliners for students to wait in, how would that affect the length of the line? While the number of people waiting wouldn’t change, the duration would certainly be impacted. This thought experiment mirrors what Duke has created with its tenting tradition, which has reached absurd levels.
Michael Munger: Your example aligns with a historical context where Duke’s basketball program evolved significantly. The tradition of tenting began in 1986 and grew out of a simple idea by a student who decided to camp out for tickets. Over the years, this evolved into K-Ville, a tent city where students camp out in shifts for weeks leading up to the Duke-UNC game.
Once tents were permitted, the nature of waiting changed. It turned into a village-like atmosphere, complete with rules and regulations devised by the students themselves. This self-governance fosters a sense of community while also intensifying the competition for tickets.
Russ Roberts: Let’s take a step back and discuss the structure of K-Ville. It is fascinating that the students have established such detailed regulations. Can you outline some of the rules and their implications?
Michael Munger: The Duke Student Government establishes a constitution each year. For instance, if over 80 tent groups register, an exam is administered to determine which groups can tent in the most desirable spots. The exam consists of detailed questions about the basketball season, ensuring that only the most dedicated fans occupy the prime locations.
This system creates a hierarchy of tenting, with black tents being the most competitive and stringent, followed by blue and white tents that have progressively relaxed rules. The black tenting phase includes rigorous checks, ensuring that participants are committed to the process.
Russ Roberts: It’s essential to note that the administration didn’t impose these rules. They emerged organically from the student body’s interactions and preferences, highlighting a unique form of self-organization.
Michael Munger: Absolutely. The administration has chosen to step back, allowing students to craft their experience. This voluntary system fosters a sense of ownership and camaraderie among participants.
Russ Roberts: Reflecting on the broader implications, it’s clear that while the Duke-UNC rivalry is steeped in tradition, it also serves as a case study in emergent order and community bonding. These experiences cultivate lasting connections among students, often leading to increased alumni engagement and donations.
Michael Munger: Precisely. The intensity of the experience can forge strong ties among students, influencing their future engagement with the university, both socially and financially.
Russ Roberts: To wrap up, it’s evident that the mechanisms at Duke, while seemingly chaotic, represent a fascinating blend of tradition, community, and emergent order that shapes the student experience. Thank you, Mike, for shedding light on this intricate topic.
Michael Munger: Always a pleasure, Russ. Thank you for having me.
