I'll Pay You $3 to Wait in Line for an Hour

Every year Ben and Jerry's does something that drives every economist crazy: they offer a free small ice cream cone to anyone who shows up. On the surface this sounds fantastic: you get something (good ice cream) for free! Nothing is free -- even in those CD deals back in the day you had to pay for shipping (can you imagine paying for CDs?) But back to ice cream -- free! The best word in the English language. Or is it?

The problem, when you offer a good at a price well below it's value is that the demand sky rockets. Ben and Jerry's ice cream is very popular. In a city like Berkeley people will line up for over an hour to get a small ice cream cone. One hour! Think about that. A small cone costs ~$3. On any other day of the week you could walk up to the counter, pay $3 and get a small ice cream cone. Today you had to wait one hour, but you paid nothing. Interestingly I'm sure if if you offered $5 to cut to the front of the line no one would accept it (why would they? they just waited in line for an hour!). Yet for just $3 you could buy that same ice cream cone any other day and not wait at all. To make the situation even more absurd you could even go to the grocery store that very day and for $3 get a whole pint.