Author: Pamela Tom

Haas Names Winner of Inaugural Fisher-Hopper Prize for Lifetime Achievement in CIO Leadership

| by Pamela Tom

The Haas School’s Fisher CIO Leadership Program has named Filippo Passerini, Procter & Gamble's chief information officer and group president of global business services, recipient of the first annual Fisher-Hopper Prize for Lifetime Achievement in CIO Leadership.

Passerini, who was honored for changing the way CIOs may view and implement information technology, created an information/decisions/solution (IDS) framework at P&G that shifted the IT focus from a service-based function to a solution-based one.

The award was announced Friday evening, Sept. 14, at the Claremont Hotel in Berkeley. Watch Passerini's acceptance speech on YouTube.

The Fisher CIO Leadership Program established the award to honor a currently active CIO for his or her lifetime achievements in CIO leadership. The award is in memory of Haas alumnus Don Fisher, BS 51, co-founder of Gap Inc. and supporter of the IT Leadership Program at Haas, and Max Hopper, the visionary behind American Airlines’ SABRE Systems that computerized and revolutionized travel reservations.

“Our bicoastal panel of judges identified 22 distinguished candidates and four finalists. Mr. Passerini was selected for the magnitude of his accomplishments coupled with his reputation as a well-respected yet humble leader,” says Jim Spitze, executive director of the Fisher CIO Leadership Program at Berkeley-Haas’ Fisher Center for Management and Technology.

“I’m deeply honored and humbled by this award from the Haas School and the highly distinguished panel of judges,” Passerini said.  “It recognizes that at P&G, we are achieving our vision of transforming IT from a back-office commodity to a strategic and competitive advantage—a journey we continue each day. This wouldn’t be possible without the tremendous talent and drive of our organization—and I share this accomplishment with all of them.”

Passerini led the integration of P&G’s IT and services groups to form one of the largest and most progressive shared services organizations in the world. He was one of the first CIOs to deploy an “open innovation” strategy of outsourcing IT and other services. In 2005, he also delivered the largest integration (Gillette) in P&G history in record-breaking time. The “commercial integration” alone spanned 69 countries, 115 distribution centers, and 71,000 new products. The scope of projects included demand management, order-shipping-billing, employee services, core financials, and business reporting— followed by the integration of manufacturing and supply planning and the Gillette infrastructure. Under Passerini’s leadership, P&G estimates it has saved more than $1 billion to date in back-office systems and solutions.

Prior to becoming CIO in 2004 and P&G group president in 2011, he held leadership roles in the U.K., Latin America, Greece, Turkey, and the United States. Passerini, a native of Rome, began his P&G career as a systems analyst in Italy in 1981.

Passerini says he believes that CIOs need to remain closely connected to the business.

“We’re at a unique point where the stars and the moon are aligned for the CIO to play a dramatically different and much more transformational role in the business.  I believe it’s less about technology, and much more about being a business person with an interest in technology," he says. "This mindset has helped our organization transform the way we do business at P&G.”

 

Back to Berkeley: Prof. Carl Shapiro Returns from Presidential Adviser Post

| by Pamela Tom

A familiar face returned to the Berkeley-Haas campus this fall. Haas School economics professor Carl Shapiro, the Transamerica Chair in Business Strategy, served in two high-ranking positions in the Obama Administration.  From March 2009 through February 2011, Shapiro served as chief economist in the Antitrust Division of the U.S. Department of Justice (DOJ). He then moved to the White House, where he advised President Obama as a member of the President’s Council of Economic Advisers (CEA).

Trading in his humongous office with a White House view for a smaller one framed with Berkeley’s Campanile is “a delightful change,” he says.

“I was here at Berkeley for almost 20 years before I went to Washington. It’s a big change. East coast vs. west coast, D.C. vs. Berkeley, wearing a suit vs. wearing a Hawaiian shirt! I’ve always been an academic.  My time in D.C. was an exciting but temporary posting,” says Prof. Shapiro.

Haas NewsWire recently sat down with Shapiro to learn more about what is was like to advise President Obama and make decisions that could potentially affect the country’s economic policies.

What was a typical day as an adviser like?

My days were very fast-paced, with questions arriving all the time, needing a quick answer. And I mean quick.  Academics take months or years to study a problem; we often had hours, days if we were lucky, to come up with our answer. My portfolio as a Member of the CEA was extremely wide-ranging.  I spent a lot of time on housing and housing finance, energy and environmental issues, international trade –especially our trade relations with China –manufacturing, and health care. I also was involved in tax policy and Federal budget issues. Happily, I also had the opportunity to work on topics quite close to my own research expertise – issues involving innovation, intellectual property, and federal research funding. During my time at the CEA, Congress passed the Leahy-Smith America Invents Act for patent reform and authorized the Federal Communications Commission to run “incentive auctions” to redeploy valuable spectrum from over-the-air broadcasting to high-speed wireless Internet access.

Intellectual property and patent law are at the heart of today’s entrepreneurism, especially here in the Bay Area. How effective is the America Invents Act?

The America Invents Act (AIA) is the biggest change to our patent system since the 1950s. The AIA should significantly improve patent quality by providing more stable funding to the U.S. Patent and Trademark Office and by establishing new post-grant review procedures by which patents that have been improperly granted can be challenged. The AIA constitutes a distinct improvement in patent policy, but it was a compromise, leaving unaddressed some of the biggest issues facing the tech industry. The issues we’re seeing, for example in the Apple-Samsung patent infringement case, at the International Trade Commission, and in the patent wars over mobile devices, signal that the patent system is still not working properly.  Plus, the stakes have increased, as we’re now seeing patent portfolios trade for billions of dollars. Now that Congress has spoken, the action will turn to the business community and the courts. As I return to my research and my consulting practice, I plan to delve into these issues.

You were the chief economist at the Antitrust Division at the DOJ for two years, overseeing 60 Ph.D. economists. What is your most memorable experience?

My single biggest area of activity was merger review. We worked intensively on the Comcast-NBC and LiveNation-Ticketmaster mergers. Our job was to figure out whether these mergers –and many others–would have anti-competitive effects and be harmful to consumers.

How do you distinguish between what’s a negative impact and what’s fair for business and free trade?

DOJ looks very closely at mergers between direct competitors in concentrated industries. The authoritative description of how the DOJ and the Federal Trade Commission (FTC) review mergers can be found in the “Horizontal Merger Guidelines” which informs businesses how their mergers will be evaluated by the federal government. One of the things I‘m most proud of during my tenure at the DOJ is that I played a leading role in revising these guidelines. They were 20 years old and no longer reflected enforcement practice or the best economic thinking. Professor Joseph Farrell, a UC Berkeley economist, took the lead at the FTC. Working together we finished the revision after one year, in August 2010.

What will you miss about Washington, if anything?

Serving President Obama, and working in the White House, was a tremendous honor. I certainly miss having regular meetings in the West Wing, not to mention my White House Mess privileges!  Working on such a broad range of fascinating issues was very exciting –and exhausting– on a day-to-day basis.  Dealing with issues outside my area of specialty was a great learning opportunity. I will miss that challenge.  But I’m very happy to be back at Berkeley. I am especially enjoying bringing some of my White House and DOJ experiences into the classroom here at Haas.

Prof. Shapiro is currently teaching “Economics for Business Decision Making” (MBA201A) in the Full-time MBA Program.

A familiar face returned to the Berkeley-Haas campus this fall. Haas School economics professor Carl Shapiro, the Transamerica Chair in Business Strategy, served in two high-ranking positions in the Obama Administration.  From March 2009 through February 2011, Shapiro served as chief economist in the Antitrust Division of the U.S. Department of Justice (DOJ). He then moved to the White House, where he advised President Obama as a member of the President’s Council of Economic Advisers (CEA).

Berkeley-Haas Lures Top Faculty from Harvard, Brown, and MIT

| by Pamela Tom

The Haas School welcomes three tenured professors from the East Coast’s finest business schools to its world-class faculty. Management and entrepreneurship professor Toby E. Stuart from Harvard Business School, a multi-award winner for his research in entrepreneurship takes the helm as faculty director of the school’s Lester Center for Entrepreneurship.  Professor Ross Levine from Brown University, ranked one of the ten most cited finance experts from 2001-2011 by Research Papers in Economics (RePEc), joins the Haas Finance Group. Associate finance professor Gustavo Manso, previously at the Massachusetts Institute of Technology, arrived at Berkeley-Haas in the spring and already holds a teaching award from his full-time Berkeley MBA students.

 “We continue to hire at the very top of the faculty market,” says Haas School Dean Rich Lyons. “It is a part of what’s making us stronger and stronger. Great faculty attracts great students and great staff – a virtuous circle, and we are in it.”

 

Toby E. Stuart

Professor Toby E. Stuart, a visiting professor at Haas for the past two years and former professor at Harvard Business School, chose the Haas School’s Management of Organizations (MORS) group as his new home this summer. He holds the Leo Helzel Chair in Entrepreneurship and Innovation and becomes faculty director of the school’s Lester Center for Entrepreneurship.

Stuart’s research focuses on social networks, venture capital networks, and the role of networks in the creation of new firms. He is the recipient of the 2007 Kauffman Prize Medal for Distinguished Research in Entrepreneurship, granted every other year to recognize an individual’s contributions to entrepreneurship research. Stuart also received the Administrative Science Quarterly’s Scholarly Contribution (best paper) award.

Stuart says one of his goals is to develop the curriculum’s aim to teach students to think like entrepreneurs regardless of their fields. “Even if they don’t plan to launch a startup company, students can learn how to use innovation to strengthen organizations in any field,” says Stuart. 

In 1995, Prof. Stuart earned his Ph.D. from Stanford Graduate School of Business. He received his A.B., summa cum laude, in economics from Carleton College in 1989.

 

Ross Levine

Professor Ross Levine, previously at Brown University’s economics department, is the Haas School’s new Willis H. Booth Chair in Banking and Finance, and a member of the Economic Analysis and Policy (EAP) group.

Levine’s just-released book, Guardians of Finance: Making Regulators Work for Us, with James Barth and Gerard Caprio critiques the role of U.S. and international regulators in causing global financial crises and proposes strategies for improving their performance.

Levine’s primary research examines how financial sector regulations and the operation of financial systems affect economic growth and poverty, economic stability, and the distribution of income and economic opportunities. His scope ranges from international finance to entrepreneurship, including the characteristics of successful entrepreneurs. He has published over 100 hundred articles.

Levine is a research associate at the National Bureau of Economic Research and a member of the Council on Foreign Relations as well as a Senior Fellow at the Milken Institute. He received his Ph.D. in economics from UCLA in 1987, after graduating Phi Beta Kappa in economics from Cornell University in 1982. 

 

Gustavo Manso

Haas Finance Group Associate Professor Gustavo Manso arrived at Haas in January 2012 and, after just one semester, Manso’s MBA corporate finance students nominated him for a teaching award. Manso previously taught for five years at MIT’s Sloan School of Management.

In 2010, Manso received the Swiss Finance Institute’s Outstanding Paper Award. He was also honored with the Review of Financial Studies Young Researcher Award in 2009. As co-founder (with Itay Goldstein) of the Finance Theory Group, Manso helps foster theoretical research in the areas of corporate finance, financial institutions, and financial markets.

Manso focuses his research on corporate finance, financial institutions, financial markets, and entrepreneurship. Studying financial incentives, his research revealed that combining tolerance for early failure with reward for long-term success is effective in motivating both creativity and innovation.

In 2006, Prof. Manso earned his Ph.D. in Finance from Stanford Graduate School of Business. He earned his M.S. in Mathematics from the Instituto de Matemática Pura e Aplicada (IMPA), Brazil, in 2001 and his B.A. in Economics from the Pontifícia Universidade Católica (PUCRio), Brazil, in 1999.

Read more about new Haas assistant professors.

Why are people overconfident so often? It’s all about social status

| by Pamela Tom

Researchers have long known that people are very frequently overconfident – that they tend to believe they are more physically talented, socially adept, and skilled at their job than they actually are. For example, 94% of college professors think they do above average work (which is nearly impossible, statistically speaking). But this overconfidence can also have detrimental effects on their performance and decision-making. So why, in light of these negative consequences, is overconfidence still so pervasive?

The lure of social status promotes overconfidence, explains Haas School Associate Professor Cameron Anderson. He co-authored a new study, “A Status-Enhancement Account of Overconfidence,” with Sebastien Brion, assistant professor of managing people in organizations, IESE Business School, University of Navarra, Haas School colleagues Don Moore, associate professor of management, and Jessica A. Kennedy, now a post-doctoral fellow at the Wharton School of Business. The study will be published in the Journal of Personality and Social Psychology (forthcoming).

“Our studies found that overconfidence helped people attain social status. People who believed they were better than others, even when they weren’t, were given a higher place in the social ladder. And the motive to attain higher social status thus spurred overconfidence,” says Anderson, the Lorraine Tyson Mitchell Chair in Leadership and Communication II at the Haas School.

Social status is the respect, prominence, and influence individuals enjoy in the eyes of others. Within work groups, for example, higher status individuals tend to be more admired, listened to, and have more sway over the group’s discussions and decisions. These “alphas” of the group have more clout and prestige than other members. Anderson says these research findings are important because they help shed light on a longstanding puzzle: why overconfidence is so common, in spite of its risks. His findings suggest that falsely believing one is better than others has profound social benefits for the individual.

Moreover, these findings suggest one reason why in organizational settings, incompetent people are so often promoted over their more competent peers. “In organizations, people are very easily swayed by others’ confidence even when that confidence is unjustified,” says Anderson. “Displays of confidence are given an inordinate amount of weight.”

The studies suggest that organizations would benefit from taking individuals’ confidence with a grain of salt. Yes, confidence can be a sign of a person’s actual abilities, but it is often not a very good sign. Many individuals are confident in their abilities even though they lack true skills or competence.

The authors conducted six experiments to measure why people become overconfident and how overconfidence equates to a rise in social stature. For example:

In Study 2, the researchers examined 242 MBA students in their project teams and asked them to look over a list of historical names, historical events, and books and poems, and then to identify which ones they knew or recognized. Terms included Maximilien Robespierre, Lusitania, Wounded Knee, Pygmalion, and Doctor Faustus. Unbeknownst to the participants, some of the names were made up. These so-called “foils” included Bonnie Prince Lorenzo, Queen Shaddock, Galileo Lovano, Murphy’s Last Ride, and Windemere Wild. The researchers deemed those who picked the most foils the most overly confident because they believed they were more knowledgeable than they actually were.  In a survey at the end of the semester, those same overly confident individuals (who said they had recognized the most foils) achieved the highest social status within their groups.

It is important to note that group members did not think of their high status peers as overconfident, but simply that they were terrific.  “This overconfidence did not come across as narcissistic,” explains Anderson. “The most overconfident people were considered the most beloved.”

Study 4 sought to discover the types of behaviors that make overconfident people appear to be so wonderful (even when they were not). Behaviors such as body language, vocal tone, rates of participation were captured on video as groups worked together in a laboratory setting. These videos revealed that overconfident individuals spoke more often, spoke with a confident vocal tone, provided more information and answers, and acted calmly and relaxed as they worked with their peers. In fact, overconfident individuals were more convincing in their displays of ability than individuals who were actually highly competent.

“These big participators were not obnoxious, they didn’t say, ‘I’m really good at this.’ Instead, their behavior was much more subtle. They simply participated more and exhibited more comfort with the task – even though they were no more competent than anyone else,” says Anderson.

Two final studies found that it is the “desire” for status that encourages people to be more overconfident. For example, in Study 6, participants read one of two stories and were asked to imagine themselves as the protagonist in the story. The first story was a simple, bland narrative of losing then finding one’s keys. The second story asked the reader to imagine him/herself getting a new job with a prestigious company. The job had many opportunities to obtain higher status, including a promotion, a bonus, and a fast track to the top. Those participants who read the new job scenario rated their desire for status much higher than those who read the story of the lost keys.

After they were finished reading, participants were asked to rate themselves on a number of competencies such as critical thinking skills, intelligence, and the ability to work in teams. Those who had read the new job story (which stimulated their desire for status) rated their skills and talent much higher than did the first group. Their desire for status amplified their overconfidence.

De-emphasizing the natural tendency toward overconfidence may prove difficult but Prof. Anderson hopes this research will give people the incentive to look for more objective indices of ability and merit in others, instead of overvaluing unsubstantiated confidence.

See the present version of the full paper at https://haas.berkeley.edu/faculty/papers/anderson/status%20enhancement%20account%20of%20overconfidence.pdf.

Top CIOs to Gather at Haas to Explore Profession in Transition

| by Pamela Tom

Some of the world's most visionary chief information officers will come together at Haas Sept. 14 for a day of events focused on the position's evolving role within organizations.

The gathering will include "Renaissance CIOs" from such diverse companies as Cisco, Charles Schwab, Frito-Lay, Marriott, and Merrill Lynch as well as a panel discussion on where the CIO profession is going. The day's events will culminate with a banquet at the Claremont Hotel to announce the winner of the first Fisher-Hopper Prize for Lifetime Achievement in CIO Leadership.

A "Renaissance CIO" is "wicked smart" and has had a "major enduring competitive impact" on both the company he or she works for as well as the industry that company belongs to, says Jim Spitze, executive director of Haas' Fisher CIO Leadership Program at Haas, which is co-hosting the program with Gartner. The idea is to transform the role of the CIO from merely managing a cost center to playing an active role in generating growth and profits.

Finalists for the Fisher-Hopper Lifetime Achievement Award are AT&T's Felix Thaddeus Arroyo, Proctor & Gamble's Filippo Passerini, Flextronics' Dave Smoley, and UPS' Dave Barnes. The prize will be awarded annually in memory of Haas alumnus Don Fisher, BS 51, founder of Gap Inc., and Max Hopper, who led the development of the Sabre computerized travel-reservation system, which transformed the airline industry.

Other CIOs scheduled to take part in the day's events include Dawn Lepore of Charles Schwab, Pete Solvik of Cisco, and Bobby Martin of Wal-Mart.

The day also will feature a discussion of a new study by the Fisher CIO Leadership Program that identifies the "invisible factors of extraordinary success" for CIOs. The study, which involved in-depth interviews with several of the field's luminaries, was initiated by Hopper.

The CIO events will start at Haas at 1 p.m. in the Wells Fargo Room and continue until 9 p.m. at the Claremont. For more information on the events, including an agenda and registration, visit fisheritcenter.haas.berkeley.edu/award.html.

Berkeley-Haas Lures Top Faculty from Harvard, Brown, and MIT

| by Pamela Tom

UNIVERSITY OF CALIFORNIA, BERKELEY'S HAAS SCHOOL OF BUSINESS – Following an extensive search for top faculty talent, UC Berkeley’s Haas School of Business successfully recruited three tenured professors from some of the east coast’s finest business schools this year. Management and entrepreneurship professor Toby E. Stuart from Harvard Business School is the new faculty director of Haas' Lester Center for Entrepreneurship. Professor Ross Levine from Brown University, ranked one of the ten most cited finance experts from 2001-2011 by Research Papers in Economics (RePEc), has joined the Haas Finance Group. Associate finance professor Gustavo Manso, previously at the Massachusetts Institute of Technology, arrived at Berkeley-Haas this spring and has already earned a teaching award from his full-time Berkeley MBA students.

“We continue to hire at the very top of the faculty market. It is a part of what’s making us stronger and stronger. Great faculty attracts great students and great staff – a virtuous circle, and we are in it,” says Haas Dean Rich Lyons.

Toby E. Stuart

Professor Toby E. Stuart has been named faculty director of the Haas School’s Lester Center for Entrepreneurship and holds the Leo Helzel Chair in Entrepreneurship and Innovation. He is also a member of the Management of Organizations (MORS) group. Stuart had been a visiting professor at Haas since fall 2010 and the acting faculty director of the Lester Center since July 2011. During that time, he taught Entrepreneurship and Advanced Comparative Strategy at the MBA level, and Research in Macro-Organizational Behavior at the Ph.D. level.

“Dr. Stuart is an award winning and extensively published scholar as well as one of our highest rated teachers. He brings incredible depth and breadth to the entrepreneurship program here at Haas,” says Andre Marquis, Lester Center executive director.

Prof. Stuart says one of his goals at Haas is to develop the curriculum’s aim to teach all students to think like an entrepreneur regardless of their field of study. “Even if they don’t plan to launch a startup company, students can learn how to use innovation to strengthen organizations in any field,” says Stuart.  

Stuart’s research is focused on social networks, venture capital networks, and the role of networks in the creation of new firms. His work is published in Administrative Science Quarterly, American Journal of Sociology, Science, Strategic Management Journal, Management Science, Research Policy, Industrial and Corporate Change, and many others. 

He is the recipient of the 2007 Kauffman Prize Medal for Distinguished Research in Entrepreneurship, granted every other year to recognize an individual’s contributions to entrepreneurship research. Stuart also received the Administrative Science Quarterly’s Scholarly Contribution (best paper) award.

In 1995, Prof. Stuart earned his Ph.D. from Stanford Graduate School of Business. He received his A.B., summa cum laude, in economics from Carleton College in 1989

Ross Levine

Professor Ross Levine is the Willis H. Booth Chair in Banking and Finance, and a member of the Economic Analysis and Policy (EAP) group at Haas. Coming from Brown University’s economics department, Prof. Levine says he accepted his Haas offer because he was impressed with the school’s emphasis on excellence – in teaching, in mentoring students to reach their potential, and in conducting relevant, influential research.

“I found the environment at Haas energizing and wanted to be a part of this outstanding institution, to contribute to its goals, and to benefit from the people at this marvelous institution.  I feel very fortunate to be here,” says Levine.

Levine is a research associate at the National Bureau of Economic Research, and a member of the Council on Foreign Relations, and a Senior Fellow at the Milken Institute.

His primary research focuses on how financial sector regulations and the operation of financial systems affect economic growth and poverty, economic stability, and the distribution of income and economic opportunities. His work on international finance includes the causes and consequences of firms raising money in different countries, international monetary arrangements (such as the Eurozone), and international finance and aid agencies (such as the World Bank, International Monetary Fund, etc.). In addition, Levine studies the “returns to entrepreneurship” –comparing earnings of entrepreneurs and comparable salaried professionals –as well as the characteristics of successful entrepreneurs. He has published over 100 hundred articles. His just-released book, Guardians of Finance: Making Regulators Work for Us, with James Barth and Gerard Caprio critiques the role of U.S. and international regulators in causing global financial crises and proposes strategies for improving their performance.

Prof. Levine received his Ph.D. in economics from UCLA in 1987, after graduating Phi Beta Kappa in economics from Cornell University in 1982. 

Gustavo Manso

Haas Finance Group Associate Professor Gustavo Manso arrived at Haas in January 2012 and after one semester was honored by his MBA students with the Earl F. Cheit Award for Excellence in Teaching for his corporate finance class. Prof. Manso previously taught for five years at MIT’s Sloan School of Management.

In 2010, Manso was awarded the Swiss Finance Institute’s Outstanding Paper Award. He was also honored with the Review of Financial Studies Young Researcher Award in 2009. He is the co-founder (with Itay Goldstein) of the Finance Theory Group, an organization to foster theoretical research in the areas of corporate finance, financial institutions, and financial markets.

Prof. Manso studies corporate finance, financial institutions, financial markets, and entrepreneurship. His work has been published in the Journal of Finance, Review of Financial Studies, Econometrica, and American Economic Review Papers and Proceedings.

“Gustavo is on the very frontier in his area of research. Recently, he has been studying how institutions and financial incentives affect innovation,” says Brett Green, Haas assistant professor of finance. “His research shows that a combination of tolerance for early failure and reward for long-term success is effective in motivating both creativity and innovation.”

In 2006, Prof. Manso earned his Ph.D. in Finance from Stanford Graduate School of Business. He earned his M.S. in Mathematics from the Instituto de Matemática Pura e Aplicada (IMPA), Brazil, in 2001 and his B.A. in Economics from the Pontifícia Universidade Católica (PUCRio), Brazil, in 1999. From 1997 to 1998, Manso was an exchange student at UC Berkeley.

Read more about new Haas assistant professors.

Student, Alumna from Undergrad Program to Compete in 2012 Olympics

| by Pamela Tom

Two aquatically inclined members of the Haas community will be diving into the pool to compete in the 2012 Olympic Games in London later this month.

Alumna Lauren Boyle, BS 11, and undergraduate Mathias Gydesen, BS 13, will compete in swimming events at this year’s games, representing their home countries of New Zealand and Denmark, respectively.

Boyle, who swam at Cal before graduating, qualified for the 200-, 400-, and 800-meter freestyle races and the 4×200-meter freestyle relay via the State New Zealand Swimming Championships in March in Auckland, where she achieved her personal best and set a national record in the 400 freestyle.

This will be the second Summer Olympics for Boyle, who also competed in Beijing in 2008. She says she is much more nervous about this one because she took a year off to focus entirely on her swimming since graduating in May 2011.

“I wanted to see how good I could get. I wanted to give myself a chance compared to all the professional athletes in the world,” she says. “I’ve put more on the line.”

Boyle’s training is intense, with two hours in the pool in the morning and in the afternoon and one and a half hours of weight or circuit training in between–five days a week.

Of course, when she isn’t swimming, she can’t help but to miss Berkeley. “The main thing I took away from lots of different professors and even my coach is that it’s really your attitude that makes a difference as to what you can achieve,” Boyle says. “On the last day of my class with [Haas Lecturer] Steve Etter in my final semester, he gave us a goodbye speech and the closing quote was, ‘Wake up every day and decide to have a great day.’ That epitomizes the people at Berkeley and how they got there and why they go on to do better and bigger things.”

Gydesen qualified in the Men’s 100-meter backstroke to become part of Denmark’s ten-swimmer roster. This followed a career-best in the event at the Indianapolis Grand Prix in March. Gydesen finished as the NCAA runner-up in the 100-yard butterfly in 2010, earning first-team Pac-10 All-Academic honors, and helped the Bears win the 2012 Pac-12 title in the 200 medley relay (backstroke leg), according to the Cal Athletics website.

 “I'm proud of studying at the Haas School of Business and love the environment up there," Gydesen told Cal Athletics. "I consider being surrounded by inspiring people─in the pool and classroom─to be a daily highlight."

Read more about Lauren Boyle in an article on the Cal Athletics website.

Lauren Boyle/All Photography by GoldenBearSports.com

The Advantages of Being First

| by Pamela Tom

How people make choices depends on many factors, but a new study finds people consistently prefer the options that come first: first in line, first college to offer acceptance, first salad on the menu – first is considered best.

The paper, “First is Best,” published in PLoS ONE (June 27, 2012) by Dana R. Carney, assistant professor of management, University of California, Berkeley’s Haas School of Business, and co-author Mahzarin R. Banaji, professor of psychology, Harvard University.

In three experiments, when making quick choices, participants consistently preferred people (salespersons, teams, criminals on parole) or consumer goods presented first as opposed to similar offerings in second and sequential positions. The authors say their findings may have practical applications in a variety of settings including in consumer marketing.

“The order of individuals performing on talent shows like American Idol. The order of potential companies recommended by a stockbroker. The order of college acceptance letters received by an applicant. All of these firsts have privileged status,” says Carney. “Our research shows that managers, for example in management or marketing, may want to develop their business strategies knowing that first encounters are preferable to their clients or consumers.”

The study found that especially in circumstances under which decisions must be made quickly or without much deliberation, preferences are unconsciously and immediately guided to those options presented first. While there are sometimes rational reasons to prefer firsts, e.g. the first resume is designated on the top of the pile because that person wanted the job the most, Carney says the “first is best” effect suggests that firsts are preferred even when completely unwarranted and irrational.

The study’s first experiment asked 123 participants to evaluate three groups: (a) two teams, (b) two male salespersons, and (c) two female salespersons. First, participants were asked to join one of the two teams and were introduced to the Hadleys and the Rodsons. Immediately following the introduction, they decided which team to join. Next, participants were told they were buying a car and introduced to two male salespersons: Jim and Jon. Immediately following the introduction, they selected the salesperson from whom they preferred to buy a car. Finally, participants were told they needed to re-make their car-buying decision and that they would be introduced to two new salespersons; this time, female: Lisa and Lori. After sequential introduction they, again, decided which person they’d like to buy a car from.

When asking participants about their choices, the researchers asked about choice in two ways: conscious/deliberate choice, which was self-reported (i.e.., “I prefer Lisa to Lori”), or they completed a reaction-time task adapted from cognitive psychology in which participants’ automatic, unconscious preference for each option was assessed (i.e. “good,” “better,” “superior”).  Regardless of whom people said they preferred, on the unconscious, cognitive measure of preference, participants always preferred the first team or person to whom they were introduced.

To test the choice preferences of consumer goods, the researchers asked 207 passengers at a train station to select one of two pieces of similar bubble gum in a “rapid decision task” or choosing within a second of seeing the choices (using psychologist Daniel Kahneman’s theory on ‘thinking, fast and slow’). Once again, the result was the same: when thinking fast, the bubble gum presented first was the preferable choice in most cases.

Researchers considered the salespeople and the gum relatively positive stimuli, without controversy. In order to test their theory with negatively charged options, Carney and Banaji asked another group of 31 participants to choose between pairs of convicted criminals and decide which one was more worthy of parole instead of prison. After viewing mug shots of two 29 year-old criminals known to have committed the same violent crimes with similar features and facial expressions, again, when “thinking fast,” participants judged the first criminal presented as more worthy of parole.

If order matters, why? Carney contends the proven “primacy has power” theory may provide the best answers. The paper cites, “a preference for firsts has its origins in an evolutionary adaptation favoring firsts …” For example, in most cases, humans tend to innately prefer the first people they meet: a mother, family members. In addition, those preferences are associated with what’s safe. Carney says the historic concept of the established “pecking order” also supports their findings that people find “first is best.”

See the full paper.

How people make choices depends on many factors, but a study by Dana R. Carney, assistant professor of management, finds people consistently prefer the options that come first: first in line, first college to offer acceptance, first salad on the menu – first is considered best. The paper, “First is Best,” is published in PLoS ONE.

 

UC Institute at Haas for Students from Historically Black Colleges Attracts Praise

| by Pamela Tom

A new UC program for students from historically black colleges and universities (HBCU) that debuted at Haas last month received resounding praise recently from UC President Mark Yudof and California Assemblyman Anthony Portantino of Pasadena.

Twenty-five undergrads from around the country came to Haas for the first UC Summer Institute for Emerging Managers and Leaders (SIEML), which featured sessions on everything from open innovation to negotiations to choosing a graduate school.

In a May 24 letter to Yudof, Portantino thanked him and the University of California for creating SIEML. "This collaboration will contribute to the much-needed diversification of UC business schools and will introduce the wealth of HBCU talent to the state of California," wrote Portantino, who helped  launch the landmark collaboration between UC and the historically black colleges and universities.

In his June 12 response to Portantino, Yudof said the collaboration is "critical to our future and will provide significant opportunities for all parties involved." He added, "UC is committed to ensuring a diverse student body at all levels of instruction and the institute is a great value to our business schools in this regard."

Indeed, the program drew praise from many students. "Our group project really allowed me to go beyond myself. I was forced to push myself and put my differences aside to work with individuals I barely know to create a business model," Angel Mills, a Howard University junior, said of an open innovation project. "The tools that I took from the class will be beneficial for me in the future."

Students receive all-expenses-paid fellowships to attend the career-building program for two consecutive years. Wells Fargo and Anthem Blue Cross provided all funding for the program. One of the six UC business and management schools will host the institute each year.

Haas Lecturer Krystal Thomas (top) helps students at the UC Summer Institute for Emerging Managers and Leaders during a workshop on storytelling for brands.

Haaski Raises More than $75,000

| by Pamela Tom

Nearly 100 golfers and guests hit the green at the Orinda Country Club May 14 for the 10th annual Haaski Golf Open and Auction, raising more than $75,000 for the Annual Fund.

This year marked the event’s first on the other side of the Caldecott Tunnel, with golfers and guests alike enjoying dinner at the club’s historic Spanish-Mediterranean-style clubhouse.

Alumnus Marc Singer, BS 86, was awarded the Haaski Leadership Award for his support of the tournament and the school.

Special thanks to the following Haaski sponsors:

Par Sponsors ($2,500):
Mollie and Ed Arnold, BS 40
Joffa and Ellen Dale, BS 66, MBA 67
Lauren and Mark French, MBA 98
Kate Ridgway and Rick Holmstrom, MBA 88
Former Dean Raymond Miles and Lucile Miles
Cortese Investment Company
First Republic Bank

Hole-in-One Car Sponsor: Mercedes-Benz of Oakland

Corporate Sponsors: ACT Catering, Grace Street Catering, Annie’s Homegrown, Branding Boulevard, Grandpa Al’s English Toffee, Henry’s & Hotel Durant, OCHO, One Hope, Popchips, Fruits & Chocolate, Pyramid Alehouse

Graduating Seniors Give Back to Haas

| by Pamela Tom

Haas undergraduate seniors donated $11,603 this year to the school as part of the Senior Gift Campaign.

A total of 142 individuals, including 124 seniors, contributed to the campaign. Twenty-two donors joined the Haas Leadership Society by giving $250 or more.

All told, the amount raised for the Senior Gift Campaign reached $47,779, thanks to gifts from alumni Brad Howard, BS 79; Steve Etter, BS 83, MBA 89, also a Haas lecturer; Dean Rich Lyons, BS 82; and a new alumni challenge hosted by Paul and Stacy Jacobs. Paul Jacobs, BS 84 and PhD 89 (Engineering), is CEO of Qualcomm; Stacy Jacobs, his wife, earned her bachelor's in the College of Letters and Science in 1984 and a doctor of optometry (OD) from the School of Optometry in 1989.

Tala Beigi and Kristen Lee, both BS 12, served as the campaign's co-chairs.

Undergrads present Dean Rich Lyons (center) with a check from the Senior Gift Campaign at graduation.

 

 

Malmendier Honored as Rising Star in Finance

| by Pamela Tom

Associate Professor Ulrike Malmendier received a Rising Star in Finance Award from Fordham University's Graduate School of Business Administration to recognize her participation in the school's 2012 Rising Stars Conference on May 9.

Malmendier was among four "stars" selected to present papers at the day-long conference, which brought finance scholars from around the country together in New York. The title of Malmendier's paper was "Learning from Inflation Experiences.”

Malmendier joined the Haas School’s Finance Group in 2010. She holds a joint appointment with the Department of Economics. Her research focuses on corporate behavioral science, especially on the biases of investors and the influence of those biases on their investment decisions. She also studies the role of overconfidence among top managers in U.S. companies when making decisions on investment, mergers and acquisitions, and capital structure.

Nobel Laureate Robert F. Engle of NYU delivered a keynote address at the conference on global systemic risk, noting that a financial crisis spurred by a collapse of the Eurozone "remains a high risk."

Fordham co-hosted the conference with NYU's Stern School of Business and Rensselaer's Lally School of Management.

Faculty & GSIs Recognized for Excellent Teaching

| by Pamela Tom

Five professors and three graduate student instructors were recognized during Undergraduate and MBA commencements last week for their excellent teaching abilities.

The recipients of the Cheit Awards were selected by panels of students based on student nominations. The award is named after Dean Emeritus Earl F. Cheit, who made teaching excellence one of his top priorities.

The faculty winners this year are:

  • Lecturer Julie Suh, Undergraduate Program
  • Associate Professor Nicolae Garleanu, PhD Program
  • Associate Professor Gustavo Manso, Full-time MBA Program
  • Assistant Professor Panos Patatoukas, Evening MBA Program
  • Visiting Professor Shachar Kariv, Weekend MBA Program  

Professor Andrew Rose was honored with a Cheit Award at the Berkeley-Columbia Executive MBA Program commencement in February. Visiting Associate Professor Rossen Valkanov received a Cheit Award at the Master of Financial Engineering Program commencement in March.

The winners of the Cheit Outstanding Graduate Student Instructor awards announced at commencement this year are:

  • Brian Ayash, PhD 13, Undergraduate Program
  • Isaac Hacamo, PhD 13, Full-time MBA Program, who also received a Cheit Award in March at the MFE commencement
  • Jared Stasik, MBA 12, Weekend MBA Program

In Memoriam: Prof. John Quigley – Leading Scholar of Housing Markets, Energy Efficient Buildings, Homelessness, and Racial Discrimination

| by Pamela Tom

John M. Quigley, a leading scholar of housing markets, local public finance, energy efficient buildings, homelessness, and racial discrimination in housing, passed away at a Berkeley, Calif. hospital on Saturday (May 12).  He was 70.

Quigley was a faculty member of the Haas School’s Real Estate Group, the Goldman School of Public Policy, and the UC Berkeley Department of Economics. The I. Donald Terner Distinguished Professor of Affordable Housing and Urban Policy, he was a campus leader, an inspirational mentor, and a leading figure in urban economics and housing policy. Since 1999 Quigley served as director of the Berkeley Program on Housing and Urban Policy, which is administered by Goldman School of Public Policy and associated with the Haas School's Fisher Center for Real Estate and Urban Economics.

During his career Quigley produced 14 books and more than 150 scholarly articles.   Quigley excelled at finding clever ways to use empirical data about housing and urban areas to answer important public policy questions such as the macro-economic impact of rising housing prices on consumption behavior, the impact of segregation on African Americans’ opportunities to accumulate wealth through investment in housing,  the effect of governmental and voluntary energy standards on energy efficiency and the value of buildings, and the relationship between housing markets and homelessness.  He combined boundless energy with an infectious laugh, which he often followed with a sharp intellectual insight.  When Quigley saw an issue that was important he immersed himself in research to figure it out.

In the 1970s, Quigley showed, with John F. Kain, that racial segregation not only ghettoized black families, it also reduced their chances of developing savings through home ownership.  In later work, Quigley went on to show how segregation reduced job opportunities for minority youth.   Kain and Quigley also pioneered the quantitative measurement of housing quality.  Their work made it possible to study housing markets where the basic commodity, “housing,” is a bundle of structural and neighborhood characteristics that cannot be completely captured by one number such as the square footage of a home.   In their 1975 book, Housing Markets and Racial Discrimination they demonstrated that statistical tools could be used effectively to value housing attributes and to control for differences in them across space and over time.   Using these techniques, they showed that in many cities blacks paid substantially more than whites for comparable housing. 

In the 1980s, Quigley began to study how government building regulations and voluntary energy standards affected energy efficiency in residential and commercial real estate.  In recent work he showed that buildings complying with voluntary Energy Star or LEED standards receive higher rents and higher selling prices—partially because of their energy savings but also because of intangible effects of the label itself due to beliefs about improved worker productivity and improved corporate image from “green” buildings.  

In the 1990s, Quigley turned to the study of homelessness.  Most scholars focused on the personal characteristics, the mental and physical disabilities and substance abuse problems, of the chronically homeless, but with co-authors Steve Raphael and Gene Smolensky, Quigley showed how housing markets, especially those with limited supplies of low quality and inexpensive rental housing, were part of the problem.  In these markets, even the lowest priced housing was often too expensive for those in extreme poverty, and small reductions in its supply due to higher government housing standards or demolition greatly elevated the risk of homelessness. 

Quigley also made fundamental contributions to the study of housing markets.  A highly influential and prescient 2001 article with Karl Case and Robert Shiller anticipated the 2001-2006 economic expansion by showing that increases in housing wealth, just like increases in stock market wealth, increased consumer spending and fueled macro-economic growth.    In recent years when many questions arose about the efficacy of mortgage markets, Quigley wrote about how better government policy and mortgage products could protect homeowners.

Quigley also investigated the impact of regulations on housing prices, the economics of refuse collection, how university decentralization stimulated regional economies, the impact of rent control, public support for congestion pricing, the economics of rebuilding cities after disasters, and many other topics. 

One other theme ran through Quigley’s life and research: his knowledge and love of Sweden.  His first publication appeared in the Swedish Journal of Economics in 1966.  He would go on to write many articles on all aspects of the Swedish economy.  He was elected a foreign member of the Royal Swedish Academy of Engineering Sciences in 2006, and he received an honorary degree from Sweden’s Royal Institute of Technology in 2007. 

Quigley’s wide-ranging and prolific scholarship was matched by his generous teaching and mentoring.  He served as a committee member for over one hundred PhD dissertations during his career, chairing twenty-six since 1990.   His was noted for his devotion to his students, his exceptionally high standards and expectations, his wide-ranging intellectual curiosity, his availability, his quick turn-around of manuscripts and papers, his generosity and humor, and his ability to get graduate students to perform at levels beyond what they thought possible by treating them as peers and partners.  His students have positions in universities, research institutes, and governmental agencies around the world.

Quigley was also a leader in service to the university and his profession. He was editor in chief of Regional Science and Urban Economics from 1986 to 2003, and he served on over two dozen editorial boards for scholarly journals during his career.  He advised over twenty research and governmental agencies including the World Bank, General Accounting Office, Urban Institute, Federal Home Loan Bank Board, Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, and institutions in Indonesia, Hungary, Germany, Sweden, and China.  Quigley was chair of the Department of Economics from 1992 to 1995, chair of the Berkeley Division of the Senate of the University of California from 1996 to 1997, and interim dean of the Goldman School of Public Policy in 2008.   He was elected a fellow of the Homer Hoyt Institute in 1992 and the Regional Science Association in 2004.  He was president of the American Real Estate and Urban Economics Association from 1996 to 1998, president of the Western Regional Science Association from 1998 to 2000, and president of the North American Regional Science Council from 2009 to 2010.

Quigley was born in New York, New York, in 1942.  He graduated from the United States Air Force Academy with distinction in 1964, and he worked as an econometrician at the Pentagon from 1964 to 1968, leaving the Air Force with the rank of captain and an Air Force Commendation Medal in 1968.  He earned his doctorate from Harvard University in 1971 and taught at Yale University from 1972 until he joined the faculty at the University of California, Berkeley in 1979.

He is survived by his wife of 36 years, Mary Curran; and four children, Sam of San Francisco, Jane-Claire of New York, and Johanna and Benjamin of Stockholm, Sweden.

A memorial service for Quigley will be held June 9 in the afternoon at the UC Berkeley Alumni House. More details will be provided as they become available.

This obituary was written by John Quigley’s UC Berkeley colleagues, primarily Henry Brady, dean of the UC Berkeley Goldman School of Public Policy.

Three Alumnae Make SF Business Times’ Influential Women List

| by Pamela Tom

Three Haas alumnae—Connie Moore, MBA 80, CEO, BRE Properties; Jennifer Cook, MBA 98, senior VP, Genentech, and Kristin Groos Richmond, MBA 06, CEO, Revolution Foods—were featured on the San Francisco Business Times' List of Influential Women published April 27.

The list also included Maria Nondorf, executive director of Haas' Center for Financial Reporting and Management. (See separate article on Nondorf.)

A special supplement to the newspaper featured a full-page article on Moore, whose photo also was featured on the cover of the supplement. In the article, Moore talks about navigating a male-dominated business world. For instance, when she interviewed for a job at BRE before graduating from college in 1977, the CEO initially didn't want to hire her because he was worried, "What's my wife going to say when I travel with (you)?"

Moore still got the job, and went on to work for other real estate investment trusts for close to two decades before returning to BRE in 2002 as chief operating officer and then taking the helm as CEO in 2005. The company, which had $400 million in assets when she first worked there, now boasts $3.3 billion in assets and $347 million in annual revenue today.

"I think my influence comes from colleagues knowing I will do what I say I'm going to do—when I'm going to do it," she says. "It's all about integrity."

Cook works as Genentech's senior vice president of U.S. sales and marketing for immunology and ophthalmology. She said her proudest professional accomplishment was being part of bringing medicines to patients over the last 25 years and seeing people she has managed grow into successful leaders. Her influence, she says, stems from her diverse set of experiences across disciplines, which gives her perspective; authenticity; and having a "relentless 'do the right thing' mentality."

Groos Richmond says her proudest professional accomplishment is founding Revolution Foods to create healthier students by offering fresh, nutritious, and affordable school lunches. "We are shaping the conversation about health, access (to real food), and high expectations for our students and their families, nationwide," says Groos Richmond, who co-founded the company with Berkeley-Haas classmate Kirsten Tobey, also MBA 06.

Read more about Connie Moore in CalBusiness

Read more about Jennifer Cook in Berkeley-Haas Magazine

Read more about Revolution Foods in Berkeley-Haas Magazine

Connie Moore, MBA 80, CEO, BRE Properties

Neuroeconomics: Studying Brain Responses Gives Marketers Increased Ability to Predict How People Make Decisions

| by Pamela Tom

Watch Prof. Ming Hsu talk about his work.

Magnetic resonance imaging (MRI) is typically used by medical professionals to visualize the internal structures of the human body. By using MRI to study the brain, Ming Hsu, assistant professor of marketing at the University of California, Berkeley’s Haas School of Business, found a method to characterize how the different regions of the brain function in concert to enable people to anticipate and respond to competitors’ behavior.

Hsu’s ongoing work to understand how people behave and learn in these complex social and strategic settings is at the forefront of the emerging fields of neuroeconomics and neuromarketing, merging traditional economic models with new mental models of behavior.

In the paper, “Dissociable neural representations of reinforcement and belief prediction errors underlie strategic learning” (PNAS: Proceedings of the National Academy of Sciences of the United States of America, January 2012), Hsu and co-authors Lusha Zhu and Kyle Mathewson, both at the University of Illinois at Urbana-Champaign, studied how brains of participants responded to outcomes that were determined jointly by their own action and the actions of their opponents.

For example, imagine two companies engaged in a bidding war for oil. Strategic thinking requires that the companies must not only consider how much supply is available but anticipate how the competitor will bid. Hsu used economic models to look at how the brain uses the history of an opponent’s action to build a mental model of what other participants in the market are doing to arrive at their behavior.

“We are able to observe how brain responses fluctuate over time dynamically in response to choices and contingencies that participants are faced with,“ says Hsu. “That means we look not just at the static structure but at how the brain responds over the course of decision making.”

During scanning, participants were asked to play a multi-strategy, economic investment game. Two players were randomly matched at the beginning of each round and competed for a prize by selecting an investment. The player who invested the most won the prize but, regardless, both players lost the amount they invested. The goal of the investment game, therefore, was to invest one unit more than the opponent. Investing more than that merely wasted the extra units invested, and investing less resulted in losing the prize. Of course, the opponent was trying to do the same thing.  By considering the opponent’s beliefs and likely moves, the participants learned to maximize their financial reward. The researchers examined neural responses during the game to track how an opponent’s change of behavior affects the other player.

The researchers focused on two types of learning processes. So-called “reinforced-based learning” (RL) operates through trial and error. In contrast, more sophisticated “belief-based learning” requires decision-makers to anticipate and respond to the actions of others. The researchers computed the areas of the brain where activity tracks these two types of learning. In addition, they discovered that the prefrontal cortex is an area that processes learning about others’ beliefs. The same area also predicts an individual’s propensity to engage in either belief learning or simply RL.

Hsu says that the same neural processes involved in this type of competitive strategic decisions are likely involved in other types of economic and consumer decisions. By studying decision-making processes in the brain, marketers may improve upon traditional surveys and market research methods to predict consumer behavior.

“We can use neuroscience as a supplement to standard research practices,” says Hsu. “For example, in addition to conducting focus groups or surveys of consumers, we can one day look at neural responses of consumers and understand how their brains react to, for example, advertising campaign and promotions.”

See Abstract. 

See the full paper.

Watch the video.

Magnetic resonance imaging (MRI) is typically used by medical professionals to visualize the internal structures of the human body. By using MRI to study the brain, Ming Hsu, assistant professor of marketing, found a method to characterize how the different regions of the brain function in concert to enable people to anticipate and respond to competitors’ behavior.

 

Undergrad’s Nanotech Team Wins Duke Startup Challenge, Heads to Other Competition Finals

| by Pamela Tom

A team that includes Haas undergraduate Nanxi Liu, BS 12, recently won $70,000 in the Duke Startup Challenge and has made the finals in three other contests, including the UC Berkeley Startup Competition.

The Berkeley startup, called Nanoly, bills itself as a nano-sized solution to a macro-sized problem: vaccines must be refrigerated, and consequently are difficult to deliver to and store in developing regions with limited or no electricity.

On Friday, Nanoly emerged as the overall winner in the Duke Startup Challenge, taking home $50, 000. That's on top of the $10,000 that Nanoly won in the women-led startup track and $10,000 in the undergrad student-led startup track from the competition in March, which drew more than 100 teams. In addition, this month Nanoly won an award valued at $2,500 from the National Collegiate Inventors and Innovators Alliance to attend a VentureLab workshop, including free registration and travel expenses.

Nanoly also won third place in the Cornell Venture Challenge on April 19. The team will compete April 24 against eight other semifinalists in the life sciences track in the UC Berkeley Startup Competition. And the team is a semifinalist in the Dell Social Innovation Challenge, which will announce winners in June.

The startup is developing technology composed of nanoparticles and a hydrogel that would eliminate the need to refrigeration for vaccines, addressing a major barrier to providing vaccines in developing countries. Its technology would help address the fact that 2.1 million people die each year from vaccine-preventable diseases, according to the World Health Organization, and 1.7 million deaths of children under the age of 5 in 2008 were attributable to vaccine-preventable diseases.

Liu serves as the business lead for the team, which also includes two UC Berkeley PhD students, Chawita Netirojjanakul (Chemistry) and Peter Matheu (Applied Science and Tech.). Liu originally came up with the idea for the startup with a friend and another member of the team, Balaji Sridhar, who is earning his medical degree and PhD in chemical engineering at the University of Colorado.

"One of the things we're both passionate about and one thing [Balaji] does research on is global health," Liu says. Sridhar, who Liu knows from high school, began working with the polymer for a completely different purpose─cartilage regeneration.

Since the team's formation, Liu says, "there's been a lot of interest across the board from pharma companies and from investors."

Visit Nanoly's website

Watch a video on Nanoly

Nanxi Liu, BS 12

Vote for Haas Team Fighting HIV in South Africa

| by Pamela Tom

A team of Berkeley MBA students who traveled to South Africa last year as part of the Haas School's International Business Development (IBD) course is competing against 11 schools to win the MBA Challenge Video Contest.

Public voting for "The loveLife Project," the Haas team's video, will be open through April 15 at promoshq.wildfireapp.com/website/6/contests/173374/voteable_entries.

The 4:33-minute video was created by Archit Bhargava, Stuart Kamin, Philip Dawsey, and Pablo Alvarez, all MBA 12. It documents the students' efforts developing a plan and framework for loveLife─a South African NGO formed to promote healthy, HIV-free living among teenagers─to expand into the rest of sub-Saharan Africa.

The competition invited students to show through video how they are making an impact in the developing world through their student projects, startup enterprises, and new careers, and how their MBA experience contributed to that impact.

The top five videos chosen by online voting will advance to the next round of judging by a committee selected by the Global Business School Network, the competition sponsor. The first-place winner will receive an all-expenses-paid trip to Delhi, India, for the seventh annual Conference of the Global Business School Network in June. The network is a nonprofit focused on addressing the shortage of skilled managers in the developing world.

Other schools in the video competition include Tuck and the University of Michigan in the U.S. and the University of Southern Queensland in Australia and IPADE Business School in Mexico outside the U.S.

An IBD team from Haas led by Hrishika Vuppala, MBA 11, won the competition last year with a video about their project in Zambia working with the Wildlife Conservation Society and Community Markets for Conservation. COMACO asks poachers to turn in their equipment to save wildlife and then provides them farm and work training, including the production of peanut butter and other products. Berkeley-Haas students helped COMACO develop a plan for sustainable growth.

Watch the Zambia video

Read more about the International Business Development Course

Economists find predicting another severe global financial crisis is nearly impossible

| by Pamela Tom

The 2008 financial crisis prompted a renewed interest among economists to construct an “early warning system” but a new study concludes that out of 65 potential causes of a global economic meltdown, few factors would have predicted the severity of the crisis across a multitude of countries.

The forthcoming paper for the National Bureau of Economic Research, “Cross-Country Causes and Consequences of the 2008 Crisis: Early Warning,” is co-authored by Professor Andrew Rose, the Bernard T. Rocca, Jr. Chair in International Business & Trade at the University of California, Berkeley’s Haas School of Business, and Mark M. Spiegel of the Federal Reserve bank of San Francisco.

“If the causes of the crises differ across countries, there is little hope of finding a common statistical model to predict them,” they said. Furthermore, the study’s findings present a challenge to the International Monetary Fund’s (IMF) current agenda to develop effective early warning models.

Rose and Spiegel think that any good early warning system must do two things: predict which countries will be most affected, i.e. the cross-sectional component, and also, when the crisis will occur, or the timing factor. Using a Multiple-Indicator Multiple-Cause model (MIMIC, Goldberger 1972), their study focuses on the countries most dramatically affected by the crisis as well as less affected countries in order to serve as control data.

The severity of the crisis in each country was measured by four variables: 1) the 2008 real gross domestic product (GDP) growth; 2) the percentage change in a broad measure of the national stock market over 2008; 3) the 2008 percentage change in the Special Drawing Right (SDR) exchange rate; and 4) the change in a country’s credit-worthiness rating from Institutional Investor, a business news and research publisher. The IMF defines the SDR as “an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies.”

“Our research found that size, from an economic perspective, had no significant impact on the incidence of crises across countries,” says Rose, “while income has a significantly negative impact; richer counties experienced more severe crises.”

The next step was to identify a list of characteristics that may have impacted a country’s economic performance during the crisis. Collected using data from 2006 and earlier, the characteristics included financial policies and conditions; domestic macroeconomic policies; and appreciation in equity and real estate markets.

In the United States, for example, many fault inflated real estate values and the subprime credit market for causing the American economy’s failure and subsequent recession. The results found while an economic collapse occurred in countries where the real estate bubble burst, other countries such as Germany and Japan, had an equally serious crisis despite the fact that both countries did not experience significant decline in housing prices.

Furthermore, Rose points out that the bubble in real estate prices was mirrored by an increase in stock prices. Notably, equity appreciation emerged as the only variable that could robustly help predict crisis severity. The sample countries’ geography and proximity to strong neighboring economies were also considered in the study but did little to consistently predict a future meltdown.

The paper concludes, “Overall, our results suggest that measurable pre-existing conditions across countries had little common impact on the relative severity of these countries’ crisis experience. “

Rose cites three possible reasons for the predictive failure. He says first, the causes of the 2008 crisis may have differed across countries. Second, the crisis might have been the result of a “truly global shock” unrelated to the characteristics considered in the study. Or finally, the shock may be of a national origin that then spreads to other countries. Rose concludes, “Politicians seek a magic instrument to prevent another serious economic crisis but our findings show there is no mechanical easy way to predict major downturns in the future.”

See the full paper.

The 2008 financial crisis prompted a renewed interest among economists to construct an “early warning system” but a new study concludes that out of 65 potential causes of a global economic meltdown, few factors would have predicted the severity of the crisis across a multitude of countries.