“Perhaps if those multifaceted US energy related issues were connected to popular game shows, we’d be well on our way to a more energy literate population”: Matt Chester. NBC TV image.
US energy issues can mirror scenarios contestants face in popular game shows
By Matt Chester
This article was published by the Chester Energy and Policy blog on October 3, 2018.
Game shows have been a hallmark of American television for decades, with everyone at one point having dreamed of receiving a million dollar check from Regis Philbin, informing Alex Trebek they’ll make it a true Daily Double, or telling Monty Hall that they’ll risk it all for what’s behind door number three.
While a great game show can become a cultural phenomenon, scientists have long realized the academic value they can provide. The right combination of game play and stakes uncovers a natural window into psychology, sociology, and economics.
When game shows incorporate compelling strategies and elements of game theory, the educational opportunity can be as high as the entertainment value.
Americans don’t typically harness the type of energy literacy that many experts would like, but that’s largely due to the complexity of various energy-related issues.
The US electrical grid is a confusing system connecting an amalgam of investor-owned utilities, public utilities, and electric cooperatives; the efforts towards decarbonizing the US energy mix is more complicated than it seems; and politicians in charge of energy policy decisions are rarely experts and thus fail in effectively communicating those issues.
But perhaps if those multifaceted energy-related issues were connected to popular game shows, we’d be well on our way to a more energy literate population. I’ll give it a first pass with these fives examples…
1. Curtailment and electricity supply management explained with ‘Power of 10’
In certain areas with strong renewable energy capacity, utilities must occasionally deal with overgeneration.
For example, when California experiences wet winters that boost the hydroelectric system and solar and wind generation is humming, the grid receives more energy than it needs or can handle.
While replacing gas with renewables succeeds in reducing emissions and achieves a more decarbonized grid (the intent of renewable energy initiatives), the inherent intermittency of renewables brings about separate issues related to how solar and wind production are impossible to predict due to reliance on weather.
As such, when the grid is flooded with more electricity supply than demand, providers are forced to curtail (or intentionally reduce output of) renewables and/or the price of energy falls below zero.
While utility-scale renewables can be switched on or off quickly and inexpensively, the same cannot be said for fossil fuel generation.
In California, overgeneration results in providers “curtailing the cleanest and newest resource on the grid, and leaving alone the 2,000+ megawatts of mostly fossil fuel imports and in-state gas.”
Utilities experiencing such overgeneration must contend with these issues by strategically planning ahead. Energy providers often utilize the day-ahead market to lock in prices for fossil fuel generation, taking into account expected renewable production.
If these estimates result in too much energy being poured into the grid, responsible parties must either shutdown renewable generation for the day, pay nearby regions to take the excess energy, or store the extra energy (which is not currently cheap or efficient)– all of these options are losing propositions.
Conversely, if utilities do not have sufficient generation then they’re looking at blackouts while additional dispatchable generation is ramped up (a costly and time-delayed solution).
Because of these concerns, the utilities must play the role of Goldilocks– not generating too much or too little, but generating an amount that’s just right. Or rather than playing Goldilocks, this situation is reminiscent of the short-lived Power of 10.
In this game show, contestants were presented with a question that had been asked of 100 people (e.g., what percentage of American women consider themselves feminists) and were tasked with selecting a percentage as a guess.
To keep advancing, a contestant’s guess must be correct within the designated margin of error (which varied from 40 per cent to 0 per cent, depending on the round). If contestants guessed too much or too little then they lost– similar to the daily game utilities must play when planning the generation resources needed for the day.
Taking it a step further, as the stakes increase in Power of 10, the margin of error likewise decreases (from $1,000 stakes with a 40 per cent allowable range to $10,000,000 for guessing exactly correct).
This relationship between stakes and margin of error parallels the situation for utilities: the larger and more customers a utility has, the stakes for guessing incorrectly are proportionally increased– both in profits lost (overgeneration) and customers endangered or enraged (undergeneration).
Actors: The utilities are acting as the contestants on Power of 10, while the actual electricity demand acts as answers to the surveys.
Game play: Power of 10 contestants don’t have the option to play conservatively; they simply must aim for as much accuracy as possible given the information provided. Similarly for electricity providers, the situation isn’t as simple as ‘playing it safe;’ they must use all the information they have to get as close to actual demand as possible or they will face consequences.
2. Dynamic pricing and demand response explained with ‘Card Sharks’
While supply-side management places the sole onus on utilities to balance supply and demand, demand response methods are alternatives that put control in the hands of the customers.
To transfer responsibility to customers, utilities vary electricity prices depending on actual or expected demand. The simplest methodology is peak pricing, where power is more expensive during specific intervals of the day (e.g., early evening when people are most likely to start using energy-intensive equipment like cooking and heating appliances).
Both peak pricing and dynamic pricing enable utilities to charge more when supply is tight to incentivize customers to shift their electricity heavy lifting (e.g., charging electric vehicles) to non-peak hours. While energy storage is costly and curtailment or energy shortages are both undesirable, demand response strategies elegantly balance supply and demand.
If Power of 10 represented curtailment and the need to guess exactly correct with minimal input, the demand response model is more akin to the classic 1970s Card Sharks.
In this game, two players were dealt five face-down playing cards. The goal was for contestants to correctly identify if the subsequent card would be higher or lower than the one that preceded it, only having the opportunity to do so after winning the trivia round. If they guessed ‘higher or lower’ correctly then they kept going, but if they were wrong then the round ended.
This strategy of repeatedly guessing higher or lower mirrors the demand response model. When supplies get strained the utility guesses that a higher price will limit the total demand, and when demand is low (thus minimizing revenue) they guess that a lower price will elevate demand.
If these guesses are wrong, they lose the round and must try again (i.e., adjust prices even higher or lower). The main difference between demand side and supply side management is that demand side gets constant feedback and can adjust accordingly, while utilities without demand side management who misestimate (i.e., are forced to curtail) suffer greater consequences.
Likewise, Card Sharks is a much more forgiving game than Power of 10 due to constant feedback and adjustments. And if you need further confirmation of which strategy for balancing supply and demand is preferable, just note that nearly 2,000 episodes of Card Sharks were aired compared with 18 episodes of Power of 10.
Actors: Utilities are the contestants constantly guessing higher or lower, while the demand responses of customers are represented by the cards
Game play: Play the odds and adjust higher or lower based on what data and statistics tell you.
3. Oil drilling leases explained with ‘The Price is Right’
When the government opens federal land for oil drilling, it’s actually auctioning off the exclusive rights to explore and drill for oil on federally owned areas for a designated period (typically between 1 and 10 years).
By leasing federal land in this way, the government raises revenue through the annual lease payments and royalties, while also promoting American energy production. While that process is straightforward, the game show aspect comes when the oil companies decide how much they want to bid in these auctions.
The potential for these leases to either boom or bust comes from the fact that it’s not generally known exactly how much oil might be sitting underneath the land. Take, for example, the Alaska Natural Wildlife Reserve (ANWR), parts of which the Trump administration is set to auction off to drilling companies.
While the reserves are expected to be massive, experts estimate the recoverable crude oil is between 1.9 and 11.8 billion barrels. No one doubts that these leases are valuable, but that’s an immense range.
The oil companies bidding just want to outbid all the other companies without exceeding the true value (thus maximizing profits). Does that sound familiar? Well then come on down, you’re the next contestant on The Price is Right!
That’s right, these companies are looking to replicate the initial round of The Price is Right— the quintessential home sick from school game show– where contestants guess the price of a consumer good as close as possible without overbidding.
Strategically, both The Price is Right contestants and bidding oil companies are trying to stay below the value of the product on which they’re bidding while exceeding the bids of all opponents.
If they think the opponents are overbidding, The Price is Right contestants are wise to bid $1 and win. Similarly, if an oil company feels that the other bids will overvalue the land, their best move is also to bid $1 (or, rather, not bid at all) because the only way to win in this scenario is to not be stuck with a lease on which you can’t profit.
Further, after winning an opening round of The Price is Right, contestants are presented with the games on which they can really profit.
Similarly, once the lease is awarded, the oil company has much with which to contend– how much oil is actually underground (which is random and out of their control, kind of like Plinko), how well can oil companies set up their infrastructure to efficiently and profitably extract oil (analogous to games like Hole in One where the better you do in guessing the prices of products, the more likely you are to win the car), and will there be enough transportation and market appetite for the extracted oil (perhaps akin to making sure there’s enough mountain left for the climbing yodeller in Cliff Hangers).
Actors: The U.S. government accepting bids for the land is Bob Barker (sorry Drew Carey, it’ll always be Bob) and contestants’ row is the group of bidding oil companies.
Game play: Don’t overbid, and if the competition is set to overbid step back and smugly bid $1. Upon winning, knock the ensuing games (or the actual drilling process) out of the park and take home the big payday.
(A more apt comparison would probably be the reality show Storage Wars, showcasing professional buyers of abandoned storage units at auction where the buyers much decide what to bid on them based solely on a view from the doorway. But while highly entertaining, Storage Wars is both staged and not a game show)
4. International climate policy explained with ‘Friend or Foe’ and ‘Goldenballs’
Climate change is the most critical and time-sensitive issue in the energy industry. Actions to take vary in scale with the actors looking to affect change– individuals can forgo air travel or eat less meat, buildings can install energy efficiency measures, cities can electrify their municipal fleet, and states can set renewable energy targets.
As beneficial as each of these steps can be, the true push to combat climate change must come from national and international policies. Given that a worldwide temperature increase of 2 degrees Celsius would be catastrophic on a global scale, why is it so difficult to reach international climate agreements?
This question has been asked by politicians and scientists for decades, but economists are the ones explaining how it comes down to the prisoner’s dilemma, the commonly discussed example of game theory where rational self-interest supersedes the optimal outcome of a cooperative group.
The prisoner’s dilemma imagines a scenario where two prisoners are separately offered the option to betray the other prisoner or remain silent. If both prisoners choose to betray, they each serve two years in prison; if one betrays while the other stays silent, the betrayer is set free and the silent one serves three years in prison; and if both remain silent, each only serve one year in prison.
Betraying their partner gives greater individual rewards than staying silent, meaning logical people should betray their partner– despite the fact that both remaining silent is best for the group.
This natural pull between acting in rational self-interest versus the (sometimes) human bias towards cooperative behaviour was compellingly exploited by two game shows: Friend or Foe in the United States and Goldenballs in the United Kingdom.
Each show sees pairs of teammates competing to earn prize money into their collective pool by answering trivia questions, with the twist coming at the end when those teams must determine how to split the cash pot.
The teammates are given the option to split the cash evenly or steal the entire winnings for themselves– if both choose to split then each gets half; if one chooses to split while the other chooses to steal then the one who chose to steal gets it all; and if both choose to steal then neither receive anything.
Again, the self-interested decision is to vote to steal every time, but riveting television comes from watching people balance that logic with their morals.
Many thought leaders have written insightful essays on the prisoner’s dilemma that is international climate negotiations (I’d recommend ones from the World Economic Forum, Global Risk Insights, and the Atlantic).
In short, nations are typically debating the level of greenhouse gas emissions to which they must commit. If cutting emissions were easy then nations would do it without any international agreement– the issue arises from the fact that energy sources that emit CO2 are (currently) cheaper and more widely entrenched.
Reducing the burning of fossil fuels is a costly endeavour, and the ability to continue to emit CO2 freely while other nations are bound by international emission-reduction agreements provides a competitive advantage.
Despite the global nature of climate change and all countries having incentive to prevent it, individual countries might find not cooperating (and instead piggybacking as free riders on the global decrease in emissions) more in their self-interest.
As Friend or Foe and Goldenballs showed, greed and self-interest are powerful forces, so successful international climate agreements must find creative and effective ways to fight the prisoner’s dilemma and eliminate free riders.
Actors: All nations of the world are the contestants of the show, negotiating whether to ‘split’ or ‘steal’ the economic benefits of polluting while other nations cut emissions.
Game play: If humanity is to survive, international leaders must tap into the moral pull towards cooperation rather than letting the greed of self-interest take over. Perhaps teams who successfully split on Friend or Foe and Goldenballs provide a blueprint.
5. Political carbon tax debates explained with ‘Deal or No Deal’
Carbon taxes are seen by many as the most effective (or perhaps only) means to limit greenhouse gas emissions and fight climate change.
Study after study supports this finding, including authoritative work from the World Bank and the International Monetary Fund, Rhodium Group, and the Organisation for Economic Co-operation and Development.
Despite that reality, supporting a carbon tax can be a perilous task for politicians. Opponents, who are often funded by the fossil fuel industry, spend big money to drum up fear that carbon taxes would be detrimental to the economy (even revenue-neutral versions like the one proposed by Citizens’ Climate Lobby), being so blunt as to say that “new energy taxes are political losers that will get you unelected.”
It goes without saying that much of the electorate will inherently fall in line and oppose any new tax they deem to be an attack directed at their wallets.
Scientifically minded and environmentally conscious politicians will believe the many authoritative studies on the topic, knowing that real change will only come with a carbon tax that reaches a significant level.
A lower-priced carbon tax could be more politically feasible, but its benefits would also diminish– with some environmental groups even historically opposing some carbon tax initiatives that they deemed would do more harm than good.
This situation is reminiscent of Deal or No Deal, the game show that took the world by storm over a decade ago.
In case you were living under a rock at the time, the premise is that a contestant chooses 1 briefcase from 26 options where each briefcase represents potential winnings from a penny to one million dollars.
Contestants then eliminate cases from the game, and the values of those cases are revealed to eliminate them from contention for what’s in the contestant’s briefcase.
Periodically, an off-screen ‘Banker’ will offer the contestant an amount of money (based on what potential dollar values are still possible for the contestant’s briefcase) to forfeit their briefcase and leave the game.
This process continues until the contestant agrees to a deal or all cases are eliminated and the contestant wins the value of their briefcase.
When it debuted, economists loved Deal or No Deal, as it provided a dataset for how people managed high-pressure negotiations and allowed for the study of risk aversion, psychology of economics, and more.
The gameplay can also relate to politicians who are periodically presented with potential carbon tax measures to support at varying price levels. Ideally, these politicians would prefer to immediately institute a sufficiently high carbon tax that can stave off catastrophe.
Such an outcome is the top goal– the million-dollar briefcase.
Conversely, these politicians want to avoid carbon tax measures that are little more than lip service that could do more harm than good in the long run– these would be the small value briefcases.
At the same time, the politicians have to be wary of pushing for too high a level (i.e., opening up too many briefcases), which could sap goodwill from stakeholders, such as the several oil giants who are supporting a moderate carbon tax.
Too aggressive of a play could force the stakeholders to exit the negotiation table and leave you with no carbon tax (this is the $0.01 briefcase). Balancing these competing interests and risks is a tricky tightrope walk, and political leaders recognize that compromise is often the best case scenario.
Perhaps there’s a mid-level carbon tax for which they’d happily settle, just like Deal or No Deal contestants want the million dollars but would be ecstatic to win $100,000.
Deal or No Deal presents a fascinating look into how real people negotiate, correctly and incorrectly, and the most astute contestants heavily weigh the odds instead of settling for nothing less than the grand prize. Similarly, politicians who understand the climate crisis must heed these same lessons to achieve a realistic but substantial carbon tax solution.
Actors: The politicians are the Deal or No Deal contestants, while the dollar values in each case represent potential carbon tax measures. The Banker represents the politicians and special interests trying to negotiate the carbon price down or away altogether.
Game play: Just as contestants should rely on statistics to figure out probabilities and run the cost/benefit analysis on each deal, politicians should rely on economists and scientists to determine what carbon taxes will be effective in reducing emissions.
When the general population isn’t mobilized on key energy issues, many draw the conclusion that people just don’t care and “energy is the thing we all need but don’t notice until it’s gone, expensive, or going awry.”
While that maxim is at least partially valid, those in the energy industry should take responsibility to guide the masses down the informed path, which requires baseline understanding of the issues.
The use of metaphors is a great tool in this quest to spread education, and tapping into the game theory , economics, and statistical building blocks of game shows that have already pervaded the public consciousness is just one way to do so.
So, I ask you, are there other connections you’d make between game shows and energy topics that would help increase public understanding and engagement? Let me know in the comments or on Twitter
If you enjoyed this post and you would like to get the newest posts from the Chester Energy and Policy blog delivered straight to your inbox, please consider subscribing today.
To read more insights into the energy industry, see this state-by-state analysis of the U.S. energy mix, this post on the U.S. Wind Turbine Database, and this article on how split incentives create issues in the energy field.
About the author: Matt Chester is an energy analyst in Washington DC, studied engineering and science & technology policy at the University of Virginia, and operates this blog and website to share news, insights, and advice in the fields of energy policy, energy technology, and more. For more quick hits in addition to posts on this blog, follow him on Twitter @ChesterEnergy.