Author: Pamela Tom

Prof. Teck Ho Receives Prestigious Williamson Award

| by Pamela Tom

Professor Teck H. Ho is a great admirer of Nobel Laureate and Haas Prof. Emeritus Oliver Williamson. That admiration only sweetened Ho’s joy when he became the second recipient of the prestigious Williamson Award Feb. 13.

The award is named for Williamson, recipient of the 2009 Nobel Memorial Prize in economic sciences. It is the highest honor bestowed by Haas faculty to a faculty member who exemplifies the attitudes and behaviors that differentiate Berkeley-Haas as an institution, detailed in our four Defining Principles: Question the Status Quo, Confidence Without Attitude, Students Always, and Beyond Yourself.

Question the Status Quo, Confidence Without Attitude, Students Always, and Beyond Yourself. – See more at: https://newsroom.haas.berkeley.edu/article/qa-five-years-haas-defining-principles#sthash.AGqzpRrv.dpuf

Prof. John Morgan was the inaugural recipient.

“Williamson was such a role model to me,” says Ho, who holds the William Halford, Jr. Family Chair in marketing. He added that the award came as a big surprise “because there are so many other top scholars here at Berkeley.”

Ho teaches behavioral economics and marketing, examining consumer and firm behavior in economic situations. His course on pricing is the most popular MBA elective at Haas.

“Teck was a perfect choice as the second recipient of this prestigious award,” said Andrew Rose, associate dean for academic affairs and chair of the faculty. “From his passion for research and teaching, to his efforts to connect students to new networks in China, he has made rich contributions to Haas.”

In addition to his teaching and research, Ho is also the editor-in-chief of Management Science journal and the director of Asia Business Center at Haas, which forges partnerships with Asian institutions to further develop management education and research.

Last November, Ho led a group of Executive MBA students on a week-long immersion trip to Shanghai, China. Through his classes, networking sessions, and tours of local businesses and organizations, the trip gave students a deep dive into the fast-paced Asian business environment. On the last night of the immersion, students shared a networking night with Haas alumni based in Shanghai.

Ho, who grew up in Singapore and taught at the University of Pennsylvania’s Wharton School, arrived at Haas in 2002. During his time here, Ho has won the Earl F. Cheit Award for Excellence in Teaching three times (2004, 2005, 2006), a Berkeley Distinguished Teaching Award in 2010, and received multiple National Science Foundation Grants (1995-2003, 2004-2007). His papers have been finalists for the John D.C. Little Best Paper award, the Paul Green Best Paper Award, and the William F. O’Dell Long Term Impact Best Paper Award.

-By Seung Y. Lee

Question the Status Quo: by producing frame-breaking research;

Confidence Without Attitude: by becoming an intellectual partner with his students;

Students Always: by always exploring and uniting diverse fields of scholarship;

Beyond Yourself: by establishing an endowed chair with his Nobel proceeds.

– See more at: https://newsroom.haas.berkeley.edu/article/prof-john-morgan-receives-2013-williamson-award#sthash.Bg2uXyi7.dpuf

 

 

Teck Ho

Marketing Prof. Clayton Critcher Honored with SAGE Young Scholars Award

| by Pamela Tom

At Berkeley-Haas since 2010, Marketing Prof. Clayton Critcher continues to build his career by studying how people navigate life as economic, political, and moral beings and by shedding light on consumer behavior.

In recognition of his body of research, Prof. Critcher has received the 2015 SAGE Young Scholars Award from the Foundation for Personality and Social Psychology (FPSP).

Critcher, an assistant professor at UC Berkeley’s Haas School of Business, is one of five winners who will be recognized at the FPSP annual conference on Feb. 26 in Long Beach, Calif. His research has focused on judgment and decision-making, moral psychology, and consumer behavior. Contemporary issues such as racial or sexual discrimination often inspire his research work.

“I use experimental methods to test how people come to understand themselves and form impressions of others,” says Prof. Critcher. “I attempt to make major contributions to basic theoretical development by studying questions of clear applied import to both business and public policy.”

In his paper, “If He Can Do It, So Can They: Exposure to Counterstereotypically Successful Exemplars Prompts Automatic Inferences” (Journal of Personality and Social Psychology, March 2014), Prof. Critcher found that positive examples of African-American success stories prompt white Americans to think less successful African-Americans simply need to apply more effort to achieve their own success. A feature story about Critcher’s research paper in The Huffington Post (June 2014) received 27,000 page likes and nearly four thousand page shares.

Critcher also co-authored the study, “The Cost of Keeping it Hidden: Decomposing Concealment Reveals What Makes it Depleting” (Journal of Experimental Psychology: General) that reveals the stress and negative impact of keeping a secret, such as one’s sexual orientation or something as simple as concealing a forbidden word. This paper was cited in The Atlantic (February 2014).

“Clayton has primarily aimed for a more general understanding of how humans think, thereby enabling him to make predictions about the behavior of different people, considering different features, of different products,” says Leif Nelson, chair of the Haas Marketing Group. “His success is reflected in the prestigious SAGE award – by discovering new things about the behavior of humans, he brings insights into consumers across many marketing situations.”

The SAGE Young Scholar Award is sponsored by the FPSP in collaboration with SAGE Publications, the publisher of hundreds of academic journals and textbooks.

“The SAGE Young Scholars Awards recognize outstanding achievements by young scholars who are early in their research careers,” says Harry Reis, President of FPSP. “The awards are intended to provide these scholars with funds that can be flexibly applied in extending their work in new and exciting directions. Previous winners of this award have gone on to positions of intellectual leadership in the field. Because these awards are highly sought after, winning a Sage Young Scholar Award is recognition of both accomplishment and potential.”

The four other SAGE Young Scholar Award recipients are Emily Impett of the University of Toronto Mississauga; Nicholas Rule of the University of Toronto; Jenessa Shapiro of UCLA and Jay Van Bavel of New York University.

At Berkeley-Haas since 2010, Marketing Prof. Clayton Critcher continues to build his career by studying how people navigate life as economic, political, and moral beings and by shedding light on consumer behavior.

In recognition of his body of research, Prof. Critcher has received a 2015 SAGE Young Scholars Award from the Foundation for Personality and Social Psychology (FPSP).

Haas Crowdfunds to Teach Good Hygiene to Underprivileged Children

| by Pamela Tom

On any given day, a child’s little hands touch hundreds of surfaces and other people – all laden with germs that can make him or her sick.

Teaching children in disadvantaged regions about the importance of hand washing to prevent infections is the primary goal of Hygiene Heroes, a curriculum-based healthcare program developed by Prof. David Levine at UC Berkeley’s Haas School of Business. The program needs a “helping hand” and has launched a crowdfunding campaign on Berkeley-Haas Crowdfund, the business school’s own fundraising platform. Hygiene Heroes hopes to raise $8000 by Feb. 16. 

Through interactive styles of learning, such as stories, games, and songs, Hygiene Heroes teaches children in Asia, Africa, and South American how to practice good personal hygiene and safe water usage. Levine’s team of UC Berkeley (including Haas) undergraduate researchers seeks travel funds to send them to partner schools in Chennai, India, this summer. There, the students will train local teachers and serve as global liaisons. Funds raised will also allow the team to purchase needed classroom supplies for the children.

“The last two summers we piloted our lessons in Chennai,” says Prof. Levine. “The children enjoyed our material and, more importantly, adopted healthier habits. We have adapted the curriculum to the communities’ feedback and look forward to returning and helping more children.”

Eventually the research team plans to share its curriculum with nonprofit organizations for global distribution.

Previously, Prof. Levine, along with Brett Green and William Fuchs, both assistant professors at Berkeley-Haas, raised $16,000 to fund their research on safer cook stoves for rural communities in developing countries.

Berkeley Crowdfund launched in 2014 to “help and attract engagement and financial support for research and innovation, community activity, and entrepreneurial ventures that typically fall between the campus’ normal funding methods and models.”

 

 

 

Keep Your Enemies Close? Study Finds Greater Proximity to Opponents Leads to More Polarization

| by Pamela Tom

Encouraging adversaries to have more interpersonal contact to find common ground may work on occasion, but not necessarily in the U.S. Senate, according to new research.

In their study, “Pulling Closer and Moving Apart: Interaction, Identity, and Influence in the U.S. Senate, 1973 to 2009,” which appears in the February issue of the American Sociological Review, Sameer B. Srivastava, assistant professor, Haas Management of Organizations Group at UC Berkeley’s Haas School of Business, and Christopher C. Liu, assistant professor of strategy at University of Toronto’s Rotman School of Management, studied the interactions among U.S. senators from the 1970s to the 2000s.

A pattern emerged. Senators either moved closer together or further apart in their voting behavior as a function of their political identities and how much contact they had with each other. This pattern was especially pronounced when contact occurred in Senate committees that were more divided.

“Conventional wisdom says interpersonal contact between people will foster collaboration and consensus,” says Srivastava. “We found that increasing physical contact between people who have opposing and public political identities can instead promote divergence of attitudes or behavior. This tendency is further amplified in environments involving high conflict, which makes political identities more salient.”

Srivastava and Liu used two measures of political identity: senators’ party affiliation and the religious climate in the senators’ home states. They also measured senators’ interactions in two ways: seating arrangements in the Senate chamber and committee assignments. Senators from the same party who had more contact — as indicated by the proximity of their seats on the Senate chamber floor and by co-memberships on Senate committees — subsequently moved closer together in their voting behavior, while senators from different parties who had more contact in later sessions of Congress moved further apart in their voting behavior.

“Co-location can induce both positive and negative outcomes. Sometimes keeping some distance is the better option,” says Liu.

The authors say the U.S. Senate is an “apt setting for the study of interaction, identity, and influence” because senators have highly visible political identities and are continually seeking to influence each other through interaction. Srivastava and Liu contend that their findings also have implications in corporate organizations with oppositional political identities that are seeking to bridge differences between polarized groups.

For example, Liu and Srivastava explain, “Post-merger integration, particularly following a contested takeover, can produce oppositional identities in a very public setting. In such cases, it may help to move interactions into more private settings and find common ground on less divisive issues before tackling the more controversial ones.”

Encouraging adversaries to have more interpersonal contact to find common ground may work on occasion, but not necessarily in the U.S. Senate, according to research co-authored by Sameer B. Srivastava, assistant professor, Haas Management of Organizations Group.

The Other “F” Word: Capitalizing on Failure

| by Pamela Tom

Watch YouTube video.

Most would agree with the old adage to learn from your mistakes—but how?

In their new book, The Other “F” Word: How Smart Leaders, Teams, and Entrepreneurs Put Failure to Work (Wiley, March 23, 2015), Berkeley-Haas lecturers John Danner and Mark Coopersmith, MBA 86, offer a seven-step framework for transforming failure into increased innovation, improved employee engagement, and accelerated company growth.

The book also includes interviews with some 60 high-level executives and entrepreneurs—from such organizations as Google, DuPont and UCSF Medical Center —who share their own experiences with failure.

“Every organization or leader experiences failure. It is the biggest, most valuable yet untapped resource to success,” explains Danner.

Danner and Coopersmith, both Berkeley-Haas senior fellows in the Lester Center for Entrepreneurship, teach a pioneering MBA course by the same name.  They became interested in failure as an important book topic when talking to groups of MBA alumni during a lecture tour.

“We noticed an interesting reaction when we talked about failure,” says Coopersmith. ”After our talks, people came to us and asked how they could start a conversation about this taboo topic in their organizations. That’s the goal of our book: to kickstart those conversations about the ‘other “F” word.’ It is not an academic textbook, but rather a pragmatic guide to exploring the frontier of failure and improving performance.”

The book, aimed at an organization’s leadership as well as its team members, offers practical advice structured around their seven-stage Failure Value Cycle:

  • Respect and anticipate failure in order to reduce the fear of failure.
  • Rehearse to improve your reflexes when failure happens.
  • Recognize failure’s signals earlier to buy time.
  • React quickly to minimize damage.
  • Reflect to draw insights.
  • Rebound to put new action plans into play to improve performance.
  • Remember to strengthen workplace culture.

“Think of failure like gravity,” says Danner, “It’s a pervasive fact of life that you can’t ignore but can leverage to reach new heights.”

The book also features insights from well-known individuals. A former governor, an astronaut, a Broadway producer, Dilbert cartoonist and Berkeley-Haas alumnus Scott Adams, MBA 86, startup guru Guy Kawasaki, and many others recount how they turned mistakes into strategic opportunities.

Take, for example, Mark Hoplamazian, the president and CEO of Hyatt Hotels Corporation. Hoplamazian, the authors explain, improved the room turnaround time by 30 percent in one of the hotel’s London properties after recognizing that a siloed service approach was costly, inefficient, and, in effect, failing.

Hoplamazian discarded the linear approach of having multiple departments (maid service, engineering, catering, etc.) follow one another to accomplish a task and integrated the various tasks into a one-team model where each team member works on his or her responsibilities simultaneously.

“Fear of failure is one of the biggest challenges for leaders,” says Coopersmith. “Mr. Hoplamazian shares his approach to encouraging experimentation, taking risks, and accepting failure on the path to worldwide innovation. As he says, ‘Version 0.5 beats version 1.0.’”

The Other “F” Word also features a foreword by Time Warner Chairman and CEO Jeff Bewkes and an afterword by China Gorman, CEO of Great Place to Work.

Most would agree with the old adage to learn from your mistakes—but how? In their new book, The Other “F” Word: How Smart Leaders, Teams, and Entrepreneurs Put Failure to Work (Wiley, March 23, 2015), Berkeley-Haas lecturers John Danner and Mark Coopersmith, MBA 86, offer a seven-step framework for transforming failure into increased innovation, improved employee engagement, and accelerated company growth. 

Quigley Medal Honors Late Real Estate Professor

| by Pamela Tom

The American Real Estate and Urban Economics Association has established the John M. Quigley Medal in memory of the late Berkeley-Haas housing expert and his extensive body of scholarly work in the fields of urban economics and housing policy.

Prof. Quigley passed away in May 2012. He was a faculty member of the Haas School of Business’ Fisher Center for Real Estate and Urban Economics since 1998, the Department of Economics since 1981, and the Goldman School of Public Policy since 1979. Quigley’s work focused on housing markets, energy efficient buildings, homelessness, and racial discrimination.

“John Quigley was a world-class scholar who made significant advances in the study of public finance, real estate, and mortgage capital markets,” says Nancy Wallace, co-chair of the Fisher Center. “His limitless energy and devotion to his students, his colleagues, and to policy-oriented university education was an inspiration. He also had a wonderful sense of humor and a laugh that could light up a room. He is greatly missed.”

The medal is awarded annually to the scholar whose work advances the academic fields of real estate, urban economics, public finance, and regional science. Karl “Chip” Case, professor emeritus of economics at Wellesley College, received the inaugural Quigley Medal earlier this year.

Quigley served as AREUEA president, as editor-in-chief of Regional Science and Urban Economics from 1986 to 2003, and as a founding member of the Urban Economic Association.

AREUEA will also honor Quigley’s memory with a legacy fund that will be used to provide support to future awardees and promote activities that embody the values that Quigley exemplified throughout his academic career. Contribute to the Quigley fund.

Quigley held the I. Donald Terner Distinguished Professorship in Affordable Housing and Urban Policy and served as founding director of the Berkeley Program on Housing and Urban Policy. The program is overseen by Berkeley-Haas and the College of Environmental Design. Carol Galante, assistant secretary of the U.S. Dept. of Housing and Urban Development (HUD) and a Federal Housing Administration (FHA) commissioner, will become the program’s new director and hold the Terner professorship beginning in January 2015. She will also be co-executive director of the Fisher Center policy advisory board.

Learn more about the John M. Quigley Medal for Advancing Real Estate and Urban Economics.

Prof. Quigley’s obit details his body of work.

The American Real Estate and Urban Economics Association has established the John M. Quigley Medal in memory of the late Berkeley-Haas housing expert and his extensive body of scholarly work in the fields of urban economics and housing policy. Prof. Quigley passed away in May 2012. He was a faculty member of the Haas School of Business’ Fisher Center for Real Estate and Urban Economics since 1998, the Department of Economics since 1981, and the Goldman School of Public Policy since 1979. Quigley’s work focused on housing markets, energy efficient buildings, homelessness, and racial discrimination.

Open Innovation Found to Be Basic Ingredient of Chez Panisse’s Success

| by Pamela Tom

In its 43-year history, Chez Panisse restaurant in Berkeley, Calif. has evolved as the purveyor of organic, local, and exquisitely prepared food known as California cuisine.

Its menu recently featured “grilled Wolfe Ranch quail with chestnuts” and “Comté cheese soufflé with DeeAnn’s garden salad.” Chez Panisse has been buying its quail from the Wolfe Ranch in nearby Vacaville for more than 20 years.

And DeeAnn Freitas is a local gardener who harvests her lettuce for Chez Panisse’s fresh daily garden salads.
Chez Panisse’s strategic use of branding its suppliers’ names on the menu is a prime example of the “open innovation” business model at work, according to a case study published in California Management Review. 

The case, “Chez Panisse: Building an Open Innovation Ecosystem,” was co-authored by Dr. Sohyeong Kim, a post-doctoral student at Berkeley-Haas; Haas Prof. Henry Chesbrough, who coined the “open innovation” term; and Alice Agogino, professor of mechanical engineering at UC Berkeley.

The authors found that owner Alice Waters’ success was built upon a community of collaborators — employees, suppliers, customers, and even competitors — in which all participants benefit from sharing ideas and building relationships with external teams.

In 1971, Alice Waters set out to reform the way Americans eat at a time when fast food and packaged food convenience reigned. Waters wanted to create a place where people could eat simple, fresh food made with local ingredients.

Chez Panisse’s “open kitchen” model fostered a hearty exchange of ideas and brought chefs and diners together. Waters began communicating a shared vision of the local food ecosystem with suppliers and farmers. Waters talked about taste and quality rather than a crop’s size and price. As the buzz spread, suppliers began sending Chez Panisse whatever fresh ingredients they had.

The open innovation culture also grew from trust. In the case study, Kim and Chesbrough write, “Alice Waters has a management style that can only be described as ‘very Berkeley’, but that approach has meant the staff feels immense loyalty to the restaurant and to one another.” For example, former Chez Panisse busboy Steven Sullivan founded Acme Bread that became the restaurant’s bread supplier – 31 years and counting.

Competitors became collaborators. The open innovation ecosystem extended to involving culinary artists and food journalists, and listening to customer feedback.

In 1996, Chez Panisse’s ecosystem went global. Alumni chefs opened their own restaurants around the world. The Chez Panisse Foundation launched the Edible Schoolyard Project, which uses gardens and kitchens as interactive classrooms. Waters also forged new relationships with international culinary institutions and corporate partners to serve organic, seasonal foods in the workplace.

The case study concludes that Alice Waters’ open innovation strategies made her a cultural entrepreneur and created an “ever-growing global ecosystem” in the world of slow, sustainable food.

In its 43-year history, Chez Panisse restaurant in Berkeley, Calif. has evolved as the purveyor of organic, local, and exquisitely prepared food known as California cuisine. Its menu recently featured “grilled Wolfe Ranch quail with chestnuts” and “Comté cheese soufflé with DeeAnn’s garden salad.” Chez Panisse’s strategic use of branding its suppliers’ names on the menu is a prime example of the “open innovation” business model at work, according to a case study published in California Management Review.

Political Correctness in Diverse Workplace Fosters Creativity

| by Pamela Tom

People may associate political correctness with conformity. But new research finds it also correlates with creativity in work settings. Imposing a norm that sets clear expectations of how women and men should interact with each other into a work environment unexpectedly encourages creativity among mixed-sex work groups by reducing uncertainty in relationships.

The study highlights a paradoxical consequence of the political correctness (PC) norm. While PC behavior is often thought to threaten the free expression of ideas, Professor Jennifer Chatman of the Haas School’s Management of Organizations Group and her co-authors found that positioning such PC norms as the office standard provides a layer of safety in the workplace that fosters creativity.

“Creativity is essential to organizational innovation and growth. But our research departs from the prevailing theory of group creativity by showing that creativity in mixed-sex groups emerges, not by removing behavioral constraints, but by imposing them. Setting a norm that both clarifies expectations for appropriate behavior and makes salient the social sanctions that result from using sexist language unleashes creative expression by countering the uncertainty that arises in mixed-sex work groups,” says Chatman.

“Creativity from constraint: How the PC Norm Influences Creativity in Mixed-Sex Work Groups,” forthcoming in Administrative Science Quarterly, is co-authored by Chatman and two Haas PhD graduates, Jack Goncalo, who now teaches at Cornell University, and Jessica Kennedy, now at Vanderbilt University, as well as Michelle Duguid of Washington University.

“Our contention is controversial because many have argued that imposing the PC norm might not just eliminate offensive behavior and language but will also cause people to filter out and withhold potentially valuable ideas and perspectives,” says Chatman, “We suggest that this critical view of the PC norm reflects a deeply rooted theoretical assumption that normative constraints inevitably stifle creative expression—an assumption we challenge.”

The authors designed their experiments taking into account the different incentives men and women have for adhering to the PC norm. Men said they were motivated to adhere to a PC norm because of concerns about not being overbearing and offending women. Whereas one might expect women to perceive a PC norm as emblematic of weakness or conformity, women in the experiment became more confident about expressing their ideas out loud when the PC norm was salient or prominent. In contrast, in work groups that were homogeneous – all men or all women – a salient PC norm had no impact on the group’s creativity compared to the control group.

Study participants were randomly divided into mixed sex groups and same sex groups. Next, researchers asked the groups to describe the value of PC behavior before being instructed to work together on a creative task. The control groups were not exposed to the PC norm before beginning their creative task. The task involved brainstorming ideas on a new business entity to be housed in a property left vacated by a mismanaged restaurant –by design, a project that has no right or wrong strategy.

Instead of stifling their ideas, mixed-sex groups exposed to the PC norm performed more creatively by generating a significantly higher number of divergent and novel ideas than the control group. As expected, same sex groups generated fewer creative outcomes. (Previous studies have found that homogenous groups are less creative because people in these groups are similar to one another with similar ideas and therefore, less divergent thinking occurs.)

See forthcoming paper.

People may associate political correctness with conformity but new research by Jennifer Chatman finds it also correlates with creativity in work settings. Imposing a norm that sets clear expectations of how women and men should interact with each other into a work environment unexpectedly encourages creativity among mixed-sex work groups by reducing uncertainty in relationships. The study highlights a paradoxical consequence of the political correctness (PC) norm. 

See more research by Prof. Jennifer Chatman.

Limiting Internet Congestion A Key Factor in Net Neutrality Debate

| by Pamela Tom

Study suggests price discrimination would lead to web recongestion

Watch Prof. Hermalin talk about his research.

Too many vehicles on the highway inevitably slow down traffic. On the Internet information highway, consumers value high-speed Internet service, but there is little reason to think broadband traffic congestion will improve if the Federal Communications Commission abandons net neutrality, according to economic research.

In their paper, “The Economics of Network Neutrality,” Ben Hermalin, Haas Economics Analysis and Policy Group, UC Berkeley’s Haas School of Business and Nicholas Economides, Berkeley-Haas visiting professor from NYU’s Stern School of Business, find that if Internet Service Providers known as ISPs initiate price discrimination in their pricing, a “recongestion effect” will occur. In other words, online delivery channels that are less congested at the onset of new pricing tiers will eventually become recongested when consumer behavior adjusts.

As the net neutrality debate continues, the study published in the RAND Journal of Economics (Vol. 43, No. 4, Winter 2012) provides a reminder of the potential fallout that multiple pricing might have on online traffic.

Hermalin and Economides use models to explore the economics of the current pricing regime known as “net neutrality,” in which residential ISPs, such as ATT and Comcast, treat all content providers equally and don’t directly charge them for the content they deliver to end users.

The models measure linear pricing versus price discrimination and compare the rate of congestion through the information pipeline between broadband providers and households under these different pricing strategies.

Hermalin says that many existing economic models examining price discrimination haven’t taken the fixed capacity component seriously. Once the fixed capacity component is understood, “relaxing net neutrality becomes a bad thing,” he says, “Except for the ISPs.”

Linear pricing sets a fixed price for a product or service. Price discrimination is a pricing strategy that offers the same or similar product at different price points in order to maximize consumer demand or preference. For example, a type of breakfast cereal may come in two sizes: a small box for individuals and a large box for families. Even though the larger box of cereal may contain twice as much cereal, the price is not double the cost of the small box.

President Obama supports net neutrality but some ISPs continue to lobby the FCC to authorize “paid prioritization” or the creation of Internet “fast lanes” for those willing to pay more.

To better understand broadband congestion, consider Prof. Hermalin’s hypothetical example of traffic on a real highway.  If two of three lanes were reserved just for Mercedes Benz vehicles, drivers of Mercedes cars would enjoy a faster commute to and everyone else in the single remaining lane would be forced to slow down due to the added congestion. Predictably, Hermalin explains, more people would start buying Mercedes in order to take advantage of two lanes rather than one lane. The result? The two lanes that were previously less congested would recongest.

“Ultimately there is no real benefit because there is a fixed capacity on the highway,” says Hermalin. “Likewise, the ISPs have a fixed amount of bandwidth to spread around unless they invest in more.”

In the net neutrality debate, ISPs claim that in order to invest in more bandwidth, they need to charge content providers (Netflix, Amazon, etc.) either for streaming certain content or for facilitating content at premium speed. For years, the FCC has debated whether to alter the current system of a neutral network.

The findings also suggest that while consumers may be willing to pay more for faster service, if net neutrality rules were relaxed, eventually the larger economic fallout would be that people will try to spend less in reaction to increasing prices.

The FCC’s authority to regulate Internet traffic is currently under appeal as broadband providers challenge whether providing Internet service is a utility subject to FCC regulation.

See the Abstract.

See the authors’ newest working paper, “The Strategic Use of Download Limits By A Monopoly Platform.

Too many vehicles on the highway inevitably slow down traffic. On the Internet information highway, consumers value high-speed Internet service, but there is little reason to think broadband traffic congestion will improve if the Federal Communications Commission abandons net neutrality, according to research by Ben Hermalin and Nicholas Economides. Their paper, “The Economics of Network Neutrality” finds that if Internet Service Providers known as ISPs initiate price discrimination in their pricing, a “recongestion effect” will occur. 

Did Low Interest Rates Boost Household Spending?

| by Pamela Tom

Real estate Asst. Prof. Amir Kermani writes about his new study that suggests that lower interest rates and reduced mortgage payments prompt consumer spending (especially in low-income households) but they also encourage consumers to voluntarily deleverage or attempt to pay off existing debt which dampens the effectiveness of monetary policy.

Read the full article.

See the full paper.

Real estate Asst. Prof. Amir Kermani writes about his new study that suggests that lower interest rates and reduced mortgage payments prompt consumer spending (especially in low-income households) but they also encourage consumers to voluntarily deleverage or attempt to pay off existing debt which dampens the effectiveness of monetary policy.

Prof. David Levine Wins Research Competition to Study Federal OSHA Effectiveness

| by Pamela Tom

Haas School economist David I. Levine and his research team are one of three winners of the Random Controlled Trials competition sponsored by the Coalition for Evidence-Based Policy. The win provides the researchers with a $96,000 grant to help conduct a new study, “The Effects of OSHA Inspections: Results from a Natural Field Experiment.”

The research team includes Michael W. Toffel, associate professor of business administration at Harvard Business School, and Matthew S. Johnson, a PhD candidate in the economics department at Boston University.

The competition garnered 50 submissions and is designed to select and fund low-cost, randomized controlled trials (RCTs) in areas of high policy importance. The coalition is a nonprofit, non-partisan organization that “seeks to increase government effectiveness through the use of rigorous evidence about what works.”

Levine, the Eugene E. and Catherine M. Trefethen Professor at the Haas School, and his team seek to determine if inspections by the federal Occupational Safety and Health Administration (OSHA) are effective in promoting safe workplace practices. By using a sample of some 29,000 business establishments eligible for a randomized inspection, the study will test whether being randomly chosen for inspection affects the business’ subsequent injury rates and also business outcomes such as workplace survival and employment over a multi-year period.

The large sample will allow the study to identify the types of workplaces where inspections are notably more or less effective and how to improve inspections in the future.

The study cost of $153,000 is being partially funded by the coalition’s $96,000 grant award.

A prior study by Levine, Toffel, and Johnson used a randomized design to evaluate the effects of inspections conducted by California’s Division of Occupational Safety and Health (Cal-OSHA). The study, published in Science in 2012, found that these Cal-OSHA inspections led to significant reductions in injuries without any detectable harm to plant survival, payroll, or employment.

Economist Levine and his research team are one of three winners of a competition sponsored by the Coalition for Evidence-Based Policy. They will receive a $96K grant to help conduct a new study on the effects of OSHA inspections.

Tapping real-time financial data can improve economic policymaking

| by Pamela Tom

Measuring the nation’s economic health has long been a slow, costly and imprecise exercise, but Assoc. Prof. Steven Tadelis helped develop a new way to measure real-time consumer behavior that could vastly improve economic policymaking.

The findings by Tadelis and Sachar Kariv, a professor of economics and chair of the UC Berkeley Economics Department, and researchers from the University of Michigan and Arizona State University appear in the journal Science.

Traditionally, the researchers said, economic analysts have been forced to rely on large-scale surveys such as the Consumer Expenditure Survey or the Panel Study of Income Dynamics. But such surveys are complex and expensive to implement, so they are conducted infrequently and with modest-sized samples, with results released after substantial time lags.

Because it is now possible to obtain fast, accurate, reliable, detailed, real-time and comprehensive information about daily personal financial spending and saving actions, government agencies and research organizations can capture rapidly-changing economic information generated by households and businesses and adjust course if necessary, the researchers said.

“The data generated by online and mobile financial applications such as Check, as well as data from social media, online marketplaces and e-commerce sites can be analyzed to address questions that policymakers, firms and individuals must answer to make better decisions,” said Tadelis.

Together, the research team examined the transactions over 10 months of about 75,000 users of the free mobile payments app, Check, who were randomly selected from a pool of 1.5 million U.S.-based users with at least one financial account – such as a credit card, bank account, insurance policy, utility bill, mortgage, pension or investment account – that the app can access regularly.

The sample recorded more than 61 million transactions, with individuals using an average of about six different accounts, and spending with credit cards about half as often as with checking accounts. The researchers, working with Check, developed a data infrastructure to estimate with precision individual spending in relation to anticipated income.

Findings of the paper, “Harnessing Naturally-Occurring Data to Measure the Response of Spending to Income,” effectively test a major economic theory called the Permanent Income Hypothesis (PIH), which maintains that the timing of anticipated personal income doesn’t relate to spending.

The study showed that on average, an individual’s total spending actually rises substantially above their average daily spending the day a paycheck or Social Security check arrives, and stays high for at least another four days. But that pattern occurs primarily with those constrained in their ability to borrow, or by the interest rates they have to pay.

Armed with this information and new ways to collect amounts of personal financial data, the research team concluded that leaders considering how and when to stimulate the economy can do a better job choosing policies that match more exactly how individuals will respond.

“Policy prescription … depends on precise estimates,” the researchers write in Science. “The value of tax rebates aimed at stimulating the economy, for example, depends critically on whether the spending rate is 20 percent, versus 50 percent, among what categories of expenditure, and over what time horizon.”

Emmanuel Saez, a UC Berkeley economist and head of the Center for Equitable Growth at UC Berkeley, called the study “pathbreaking” for its use of a dataset with real time and detailed information on incoming and spending.

“This is a great example,” he said, “of how new technologies are generating new big data that can also have incredible value for scientific research. UC Berkeley is ahead of the curve on big data, having recently launched the Berkeley Institute for Data Science, which will cut across many disciplines, including economics.”

The Check data is collected on accounts daily and organized intuitively so users can get a comprehensive view of their financial situation via computer, smartphone or tablet. The study sample covered a wide range of ages, geography and incomes.

Measuring the nation’s economic health has long been a slow, costly and imprecise exercise, but Assoc. Prof. Steven Tadelis helped develop a new way to measure real-time consumer behavior that could vastly improve economic policymaking. “The data generated by online and mobile financial applications such as Check, as well as data from social media, online marketplaces and e-commerce sites can be analyzed to address questions that policymakers, firms and individuals must answer to make better decisions,” said Tadelis.

Fast Forward: High-speed trading debunked

| by Pamela Tom

Video: Watch Prof. Terrence Hendershott talk about high-frequency trading.

High-frequency trading (HFT) drew national attention earlier this year from author Michael Lewis’ latest book, Flash Boys. But Associate Professor Terrence Hendershott, has been studying its effects since 2005, when investor-specific data on algorithmic trading transactions started to become available. Here Hendershott weighs in on whether high-frequency trading is good, bad, or simply inevitable.

How is “high-frequency trading” different?

Financial markets and stock exchanges aren’t real places anymore with a bunch of people standing around yelling out prices. Instead, you have a bunch of computers next to each other. Traders need their computers located as close to the exchange servers as possible because that’s how you can trade the fastest.

In Flash Boys Lewis claims high-speed traders are gaming the market by using complex algorithms. Do you agree?

Lewis writes a compelling story, but large institutions have always complained that they can never trade as much as they want without prices moving. Lewis talks about well-known short seller David Einhorn, whose hedge fund has made a lot of money. Whenever Einhorn is selling, you don’t want to be the person who’s buying. High-frequency traders figured out how to use technology to avoid being run over by big investors like Einhorn, who are unhappy because high-speed trading means they aren’t making as much money as before.

The book portrays it as some enormous conspiracy, and that part is untrue. There were people who could no longer trade the way they used to, and they stopped doing as well. We can’t slow down the economy to help the buggy whip manufacturer stay in business.

What does high-speed trading mean for the small investor?

Most small investors use online brokers such as Schwab and Ameritrade, which send their customers’ orders directly to high-frequency trading firms such as Citadel and Getco. They never go to the public market or undergo any sort of distortions that Lewis was writing about. And these small investors are arguably better off because the spread between the price you can buy or sell at, or bid and ask price, has become narrower over time. So they pay less to trade in terms of the cost of the spread.

Small investors also invest lots of money through large institutions—mutual funds, retirement funds. This is where there are more interesting questions. The concern is that high-frequency trading would somehow generate a small tax on your retirement fund because every time your retirement fund trades it pays a little bit more, so your rate of return is lower.

Your latest research found that high-frequency trading makes prices more efficient. That’s good, right?

We got some data from Nasdaq that identifies high-frequency traders, and we looked at whether their trading helps predict future price changes. The answer is yes. Next we want to look at how it does this.

What is the future of high-speed trading?

Unless the regulators change the rules, high-frequency trading is here to stay because it is simply a more efficient way of certain types of trading. It is a cutthroat business where firms continually invest resources in being as fast and smart as possible. I don’t see that changing. –Interview by Pamela Tom

High-frequency trading (HFT) drew national attention earlier this year from author Michael Lewis’ latest book, Flash Boys. But Finance Professor Terrence Hendershott has been studying its effects since 2005, when investor-specific data on algorithmic trading transactions started to become available. Hendershott weighs in on whether high-frequency trading is good, bad, or simply inevitable. Watch video.

Financial Engineering Students Launch Options App

| by Pamela Tom

Students in the Berkeley Master of Financial Engineering (MFE) Program have a new mobile tool to help them better understand options pricing, thanks to their predecessors in the class of 2014.

Before graduating earlier this year, a team of seven MFE classmates created a new mobile phone application intended to help students understand pricing of complex derivatives and the sensitivity of inputs in pricing equations. Since its launch in the Apple iTunes Store in April, the app has been downloaded by about 200 users.

The app, called ExoPricer, prices financial derivatives instantly, providing descriptions and formulas for vanilla options and exotic stock options. The app’s intent is to help people more easily understand the underlying dynamics that contribute to the pricing of derivatives.

“It’s perfect,” says Simon He, MFE 15, president of the Financial Engineering Student Association. He downloaded the app about a month ago and is recommending it to peers because it’s easy to use and comprehensive. “At least 30 percent of my classmates are using it, and my friends in China are using it. The code is very refined, and you get results instantly.”

Students from the class of 2014 began developing ExoPricer in July 2013 after they were challenged to price a very complicated derivative in Adjunct Professor Domingo Tavella’s Quantitative Methods in Derivatives Pricing class, says Wilson Wong, MFE 14.

The assignment required weeding through many academic papers, often taking the students days or even weeks to gather the relevant information, Wong says.

“This resulted in all-nighters and an unpleasant experience, even though it was a very valuable learning experience,” he says.  

Li Sun, MFE 14, another student in Tavella’s class, suggested writing an application to help alleviate some of the research headaches. Wong and Sun, working with five classmates, decided to include visualizations of sensitivities that affect the pricing of options contracts. These sensitivities are often represented by what are called the “Greeks.” One example is delta, which measures the sensitivity of an option’s theoretical value to a change in the price of the option’s underlying asset.

Li and Wong researched the technical details and created a framework for multiple types of options. Then the rest of the team — including Darren Ho, Albert Yu-ying Lee, Kate Matrosova, Chris Phillippi and James Jue Wang, all MFE 14 — started implementing the code and gathering documentation about specific options.

“The app also gave us a chance to apply the key elements of being a quant,” Wong says.

ExoPricer took less than five months to complete. The team was able to finish its work this past January and push ExoPricer on to the iTunes App Store before graduation. Its cost: 99 cents.

In addition to be a useful study aid, Wilson says, the app can help prepare graduates for investment bank job interviews and educate investors and bankers.

“This is one of the reasons I enjoy my work so much,” says Linda Kreitzman, executive director of the Berkeley Master of Financial Engineering Program. “Our students are very creative in spite of a very rigorous curriculum.”

Check out ExoPricer in the Apple iTunes Store

Haas’ Achievements in Responsible Management Education and Research Outlined in UN Report

| by Pamela Tom

Demonstrating its commitment to its mission of developing leaders who redefine how we do business, the Haas School has released its first progress report on the United Nations Principles on Responsible Management Education (UN PRME).

The goal of UN PRME is to inspire and champion responsible management education, research, and thought leadership globally.  

Haas was one of the first top-ranked business schools to sign on to UN PRME, in August 2012, and has just released its first report. Signatories commit to reporting publicly every two years on their progress against principles that include : being purposeful in developing students as future generators of sustainable value for business and society; engaging in research on the role of corporations in the creation of sustainable social, environmental, and economic value; and creating educational frameworks, materials, processes, and environments that enable effective learning experiences for responsible leadership.

“As PRME’s principles are very much aligned with our school’s culture and vision to develop pathbending leaders, we see the reporting process as helping Berkeley-Haas to drive continual innovation,” says Dean Rich Lyons.

The Haas School’s inaugural report covers activities and achievements during the 2012-2013 academic year in the Full-time Berkeley MBA Program and identifies future objectives for furthering its progress.

Some achievements detailed in the report include :

  • 25 electives in the fields of social impact or sustainability offered during the 2012-2013 academic year. Among them: Energy and Environmental Markets, Social Sector Solutions, Business and Natural Resources, Women in Business, Cleantech to Market, and Innovation in Health Care.
     
  • 348 students took at least one of those PRME-related electives. This figure includes approximately half of all full-time Haas MBA students as well as more than 100 who were attracted from a diverse array of other graduate schools across campus.
     
  • Launch of the new thought-provoking Berkeley-Haas Case Series to share business lessons from unconventional management strategies and disruptive trends.
     
  • Launch of the E2e Project, a joint venture of the Energy Institute and the Massachusetts Institute of Technology that expands the volume of dedicated research on the economics of energy efficiency.
     
  • Launch of the new Institute for Business and Social Impact, which elevates the importance of social impact at Haas by bringing together programs and activities in the areas of sustainability, health care, and nonprofit leadership.
     
  • 6 case and startup competitions hosted by Haas that encourage and reward socially responsible business plans and ideas, in addition to 3 academic conferences promoting scholarship and dialogue in energy and corporate sustainability.
     
  • Major expansion of the Haas Socially Responsible Investment Fund, in order to further student learning in the critical issue of socially responsible investing.

Future plans and objectives outlined in the report include offering a new  “Social Lean LaunchPad” entrepreneurship course in the 2014-2015 academic year and developing plans to launch a “Valuing Women in Business Initiative” to provide research and teaching on the challenges confronting women in business.

PRME was established in 2007 as a global call for responsible management education.  Since that time, 530 institutions of higher education from 80 counties around the world have signed the PRME initiative, including business schools, universities, and business associations.

The Haas School’s first UN PRME Progress Report was written by Christina Meinberg, associate director of the Center for Responsible Business; Fani Garagouni, assistant to Senior Assistant Dean Jo Mackness and CFO Suresh Bhat; and Nivani Govinder, MBA 14, based on interviews with about 15 members of Haas faculty and staff. Other contributors included Jo Mackness, Jay Stowsky, Laura Tyson, Kristiana Raube and Ute Frey.

Read the Haas School’s UN PRME Progress Report

Read a post about UN PRME on the Institute for Business and Social Impact Blog

Julia Min Hwang Takes Helm of MBA Career Group

| by Pamela Tom

After leading the Full-time Berkeley MBA Program for a decade, Julia Min Hwang has taken the helm of the Haas School’s Career Management Group.

Hwang became executive director of career management services and corporate engagement on June 2, a role that serves all students and alumni in the Full-time Berkeley MBA, Evening & Weekend MBA, and Berkeley MBA for Executives programs. Hwang also will be responsible for overseeing corporate engagement for the Haas School. This includes stewarding and cultivating strategic, multi-faceted partnerships with employers to increase opportunities for student careers, speaking engagements, and experiential learning projects.

“I am thrilled to be joining this amazing team and working with our entire MBA student population and alumni,” says Hwang. “I also look forward to working with our internal and external partners to enhance our corporate engagement.”

Under Hwang’s leadership, the Full-Time Berkeley MBA Program has consistently improved and innovated student experiences — both in academics and student activities. Hwang co-led the Berkeley Innovative Leader Development (BILD) initiative, which created a structure for the school’s strategy to develop innovate leaders. She closely collaborated with the faculty to better integrate core classes and to provide an array of courses to meet student demand and interest. She also provided support and guidance to students for such activities as conferences, competitions, and club life.

In addition to her responsibilities in the Full-time MBA Program, Hwang has served on various school-wide committees such as the Senior Leadership Team, Leading Through Innovation Brand Council, and Culture Implementation Team.

During the transition, Dan Sullivan, senior director of academic affairs in the Full-time Berkeley MBA Program, will serve as interim executive director.

81 Faculty Members Make Elite “Club Six” for Spring Teaching

| by Pamela Tom

Students gave 81 faculty members, or approximately 50 percent of the spring’s 161 instructors, a mean teaching score of at least six on a seven-point scale.

Based on written evaluations from students in all degree programs, the “Club Six” ranking is a key metric used by Haas to measure the teaching performance of its instructors.

Among the spring 2014 Club Six members, 11 instructors, or 7 percent of spring semester faculty, had means of at least 6.0 and above in multiple courses.

Faculty members who received special mention for making Club Six in multiple degree programs during the spring semester were:

Henry Chesbrough (EWMBA, MBA)
Peter Goodson (EWMBA, MBA)
Teck Ho (EWMBA, MBA)
Clark Kellogg (MBA/EWMBA, EWMBA)
Alastair Lawrence (MBA/EWMBA, MBA)
Reza Moazzami (EWMBA, UG)
Christine Parlour (EWMBA, MBA, UG)
Holly Schroth (MBA, UG)
Sameer Srivastava (EWMBA, MBA)
James Wilcox (EWMBA, MBA)
Cort Worthington (EWMBA, MBA, UG)

See a comprehensive list of the Club Six scores (Haas password required)

 

Financial Engineering Program Hosts Bitcoin Roundtable

| by Pamela Tom

The future of crypto-currency and Bitcoin, the controversial online virtual currency, will be the topic of debate June 18 at a roundtable discussion at Haas featuring several industry leaders.

Hosted by the Berkeley Master of Financial of Engineering (MFE) Program, the discussion will run from 1 p.m. to 3 p.m. in Cheit 230. The event will be open to 22 members of the Haas community on a first-come, first-served basis and broadcast live to 100 people on WebEx at haas.berkeley.edu/MFE/bitcoin.html. A video recording of the event will be available 24 hours later on the MFE website.

The panel will feature:

  • Michael Casey, a senior columnist at the Wall Street Journal in New York who covers global economics and markets.
  • Jesse Powell, CEO of Kraken, a startup that has developed of a crypto-currency exchange.
  • Keren Zhou, chief economist at Buttercoin, a startup that provides Bitcoin exchange services to other companies.
  • Tariq Dennison, MFE 04, founder of the GFM Group in Kong Kong.

MFE Executive Director Linda Kreitzman will moderate the discussion and plans to ask some tough questions about the validity of bitcoin and its future.

Moderator: Linda Kreitzman

Linda Kreitzman is the executive director of the Master of Financial Engineering Program at the Haas School of Business, University of California at Berkeley. Kreitzman helped launch the MFE in 2000. She has successfully led the curriculum, admissions, and placement of MFE alumni and students in key positions in buy-side and sell-side firms for the last 14 years. In her spare time, Kreitzman serves as advisor to a few startups in Europe and the United States.

 

Michael Casey, Wall Street Journal
Michael Casey is an editor and senior columnist covering global economics and markets at the Wall Street Journal. He is the author of the "Horizons" column on Moneybeat and the daily "Horizons Global Call" roundup of global economic and financial events. Michael is also a regular host of the AM News Hub show on WSJ Live. Michael is the author of The Unfair Trade, a book on the global dimensions of the financial crisis and, before that, of Che’s Afterlife, about the international impact of Alberto Korda’s iconic image of Che Guevara. He is a graduate of the University of Western Australia and has a master’s degree from Cornell University.  

Tariq Dennison, GFM Group
Tariq Dennison, MFE 2004, has worked with structured funds, equity derivatives, currencies, commodities, and fixed income at Commerzbank, Bear Stearns, JP Morgan, CIBC, and Societe Generale. He co-founded GFM Group in 2013 in Hong Kong to help make a wider range of financial instruments, techniques, and technologies understandable and usable to brokers, money managers, investors and corporate treasurers in Asia. Tariq has written more than a dozen articles explaining Bitcoin's workings and applications and likens digital currencies’ impact on banks to email’s impact on post offices.

Jesse Powell, Kraken and Payward
Jesse Powell is a serial entrepreneur in the virtual goods marketplace industry and the co-founder and CEO of Kraken, one of the fast growing Bitcoin exchanges targeting European and US clients. Expert in virtual currencies, online/international payments and fraud, Jesse is the founder and former CEO of Lewt, Inc., a $10mm/year virtual goods business established in 2001. He then founded and was CEO of Internet Ventures and Holdings in 2006. He has been obsessed with everything Bitcoin since he first discovered it in March of 2011.

Kevin Zhou, Buttercoin
Kevin Zhou is the chief economist at Buttercoin and Managing Partner at Mandelbrot Ventures.  He has been an advocate of Bitcoin and a part of the crypto-currency community since early 2011. Kevin previously worked as a prop trader at Cutler Group and as a quant at Standard and Poors. He holds an MFE from Berkeley, an MA in economics from Boston University, and a BA in mathematics and economics from Berkeley.

 

Wikimedia Commons

Energy Institute to Honor Borenstein with Seminars

| by Pamela Tom

Haas alumni and energy professionals are invited to attend a day of seminars on everything energy—from electricity metering to the effects of fracking on local economies—on June 26 in the Wells Fargo Room.

Hosted by the Energy Institute at Haas, the seminars are part of the annual week-long “Energy Camp” at Berkeley-Haas, where energy economists will be gathering from around the country. The day of seminars is open to the public and will be held in honor of Haas Professor and outgoing Energy Institute Faculty Director Severin Borenstein.

The seminars aim to encourage and enable collaboration between researchers who are focused on pressing energy and environmental challenges. Topics to be represented include the potential for market manipulation in the California greenhouse gas cap-and-trade program, the local effects of hydraulic fracturing, and the environmental impacts of algae biofuel.

June 26 will be specifically dedicated to a series of seminars showcasing work that has been influenced by Borenstein during his 20 years in a leadership position at the Energy Institute. The seminar day in Borenstein’s honor will culminate in an invitation-only dinner at the Shattuck Hotel to recognize his 20 years of leadership.

Borenstein is stepping down as the institute’s faculty director on June 30.  Associate Professor Lucas Davis will assume the role alongside Professor Catherine Wolfram, who has shared the role with Borenstein since 2009. Borenstein will remain an active member of the Energy Institute community. He plans to spend more time on energy economics research and participation in the policy process.

For more information on the June 26 day of seminars in Borenstein’s honor, visit ei.haas.berkeley.edu/seminars.html.

Your Genes Affect Your Betting Behavior

| by Pamela Tom

This is an excerpt. See the entire article on the UC Berkeley NewsCenter.

Investors and gamblers take note: your betting decisions and strategy are determined, in part, by your genes.

Dopamine is a neurotransmitter – a chemical released by brain cells to signal other brain cells – that is a key part of the brain’s reward and pleasure-seeking system. Dopamine deficiency leads to Parkinson’s disease, while disruption of the dopamine network is linked to numerous psychiatric and neurodegenerative disorders, including schizophrenia, depression and dementia. Researchers from the University of California, Berkeley, National University of Singapore and University of Illinois at Urbana-Champaign (UIUC) have shown that betting decisions in a simple competitive game are influenced by the specific variants of dopamine-regulating genes in a person’s brain.

While previous studies have shown the important role of the neurotransmitter dopamine in social interactions, this is the first study tying these interactions to specific genes that govern dopamine functioning.

“This study shows that genes influence complex social behavior, in this case strategic behavior,” said study leader Ming Hsu, an assistant professor of marketing in UC Berkeley’s Haas School of Business and a member of the Helen Wills Neuroscience Institute. “We now have some clues about the neural mechanisms through which our genes affect behavior.

The implications for business are potentially vast but unclear, Hsu said, though one possibility is training workforces to be more strategic. But the findings could significantly affect our understanding of diseases involving dopamine, such as schizophrenia, as well as disorders of social interaction, such as autism.

“When people talk about dopamine dysfunction, schizophrenia is one of the first diseases that come to mind,” Hsu said, noting that the disease involves a very complex pattern of social and decision making deficits. “To the degree that we can better understand ubiquitous social interactions in strategic settings, it may help us understand how to characterize and eventually treat the social deficits that are symptoms of diseases like schizophrenia.”

Hsu, UIUC graduate student Eric Set and their colleagues, including Richard P. Ebstein and Soo Hong Chew from the National University of Singapore, will publish their findings the week of June 16 in the online early edition of the Proceedings of the National Academy of Sciences.

Asst. Prof. Ming Hsu, Haas Marketing Group, studies neuroeconomics. His recent research shows that betting decisions in a simple competitive game are influenced by the specific variants of dopamine-regulating genes in a person’s brain. “This study shows that genes influence complex social behavior, in this case strategic behavior,” said Hsu, study leader Ming Hsu, “We now have some clues about the neural mechanisms through which our genes affect behavior.