Here’s a question Mike Munger offered in class recently: why do movie tickets cost the same for every movie when some are vastly more popular than others? The prices of plane tickets, hotels and other services are adjusted based on demand, so why not movies?

We came up with a couple of possible answers. First, people don’t want to worry about how much a movie will cost when they show up at the theater — call it mental transaction costs. And more importantly, movie theater owners make most of their money at the concession stand so they want to keep theaters full.

I was reminded of this discussion reading James Surowiecki’s excellent The Wisdom of Crowds, which has a nice passage on movie theater pricing (Amazon Inside The Book link so you can read it yourself).

In short, he agrees — it makes no sense. As Surowiecki writes, theater owners might not want to charge more for popular movies if higher prices prevent sellouts, and thereby lessen concession revenue. But there’s absolutely no reason theaters can’t charge less for less popular movies, which would make theater owners and consumers better off. Let the market rule!

PS If you liked The Tipping Point, you will like Blink (also by Malcom Gladwell) and The Wisdom of Crowds – pick them up and support smart nonfiction.