Why Popcorn Costs So Much at the Movies: And Other Pricing Puzzles

Of all the good books I've read recently, "Why Popcorn Costs So Much at the Movies And Other Pricing Puzzles" is almost certainly the best. The book looks at a large number of pricing puzzles and tries to provide rational explanations for why they might be the case. Largely, these focus on the degree to which different pricing structures arise in different situations. For example, why should manufacturer's rebates or coupons exist? If everyone redeems the rebates or has the coupon, there's no reason to bear the transaction cost of the extra hurdle, and so firms should just set the discounted price as the regular price. On the other hand, if no one uses coupons or rebates, there's no reason to even offer the discount at all. So the only time when coupons or rebates could exist is when only a portion of consumers will take advantage of them - and then you get into the puzzle of why some consumers might want to take advantage of them and others would not. McKenzie takes great pains to illustrate the possible ways to resolve these puzzles. There is also a strongly Hayekian component to the book. The presumption underlying most of his cases is that the people with the incentives to get prices right are more likely to have done so than the casual observer. The fact that a puzzle exists is taken as evidence that the puzzled observer probably doesn't fully understand the situation (and not that the economic agents are stupid for acting in such a baffling manner). The best parts of the book, however, come when McKenzie reveals a puzzle that you thought was solved. He makes strong cases for why often people's intuition about the nature of an economic phenomenon are often misguided - which opens the reader's eyes to the more interesting underlying dynamics. Overall, I recommend this book to anyone and everyone who is even a little interested in understanding economics as the science of making decisions. Most of his pricing puzzles go a long way to explaining many of the basic concepts in economics in a fun and fascinating way that is easy to connect to.

Who would have guessed that the price of popcorn, movie tickets, ink cartridges, etc. was so involved? The author does a great job making these complex issues easy for everyone to understand. I would recommend this book to anyone who wants to know "why"... Better then Freakonomics.

If you have seen or heard McKenzie being interviewed about his book on TV or radio, you might think that his book is about nothing more than the price of popcorn. He does provide an interesting explanation for the high price of popcorn that is very different than what almost everyone believes. But the book uses simple economic reasoning and examines lots of facts to explain the pricing of a host of different products and services. And he does so in an engaging way, with many chapters written as economic mysteries in which McKenzie begins by presenting the common explanation for a pricing policy (for example, ending prices with a 9), pointing out the problems with this explanation and then challenging readers to see things differently by leading them to a more compelling explanation for the way prices are what they are. I'm not sure this makes McKenzie the Agatha Christie of economics, but it does help make this an enjoyable as well as informative book about prices--something we all have an interest in.

This book is really the best I know for solving many everyday puzzles on pricing. When you have a look at the table of contents, do not put the book aside because you think you already know all the answers: there is much more to it than what you think in the beginning. With respect to entertainment, it keeps up with "Freakonomics", but with much more economics reasoning in it! Nevertheless, you don't need to be an econ major to understand it (but it certainly would enrich your knowledge as well) A good book for your night table as well as every econ and business student's desk.

The book takes some of the complexities of economics and puts them in laymen's terms. Popcorn prices, airplane pricing and other items we pay for each day. McKenzie uses everyday scenarios to show how economics affects all of us each and every day. Very entertaining.