Professor Nancy Wallace wins top honor for work in real estate & urban economics

Professor Nancy Wallace, a national expert on real estate finance and strategy, mortgage-related securities, and pricing models, has received the 2024 John M. Quigley Award—the highest honor of the American Real Estate and Urban Economics Association (AREUEA).

Berkeley Haas Prof. Nancy Wallace
Prof. Nancy Wallace

The award, named for the late Berkeley Haas professor emeritus and leading urban economics scholar John M. Quigley, recognizes scholars who best represent the ways in which Quigley advanced the academic fields of real estate, urban economics, public finance, and regional science. 

The medalist must have produced a record of scholarship that opens up new avenues of inquiry, have a demonstrated record of mentorship of young scholars, have supported institutional advances within these fields, or have been particularly effective at dissemination of these fields to public and professional practices,” said Stijn Van Neiuwerburgh, outgoing president of AREUEA. “Nancy embodies all of the ideal traits of the Quigley Medal winner.”

Wallace has been at Berkeley Haas since 1986, where she is the Lisle and Roslyn Payne Chair in Real Estate Capital Markets, chair of the Haas Real Estate Group, and co-chair of the Fisher Center for Real Estate and Urban Economics, and directs the Real Estate and Financial Markets Laboratory. She is a national leader in her field, having served as an advisor to the Federal Reserve and the U.S. Treasury on financial crises and reform. Her research focus includes residential house price dynamics, mortgage contract design and pricing, securitization and asset backed security pricing and hedging, lease contract design and pricing, methods to underwrite energy efficiency in commercial mortgages, and valuation models for executive stock options. 

On campus, Wallace received the 2021 Williamson Award, the top faculty honor at Berkeley Haas, and earned the Berkeley Faculty Service Award in 2019 for work helping the campus navigate complex financial and real estate issues.

Wallace will receive the award and discuss her scholarship as the keynote speaker for the 2024 Midyear National AREUEA conference in May. 

Dean’s Speaker Series: Author Michael Lewis on Sam Bankman-Fried’s unusual org chart and ‘Going Infinite’

It should have been a red flag that FTX’s organizational chart was created behind Sam Bankman-Fried’s back by his personal psychiatrist. Or that Bankman-Fried didn’t even want an org chart in the first place. 

Those were among the anecdotes that financial journalist Michael Lewis shared from his new book in his Dean’s Speaker Series talk, co-sponsored by the Berkeley Center for Workplace Culture and Innovation, with Acting Dean Jennifer Chatman. 

Lewis’ new book, Going Infinite: The Rise and Fall of a New Tycoon, was published Oct. 3, one month before Bankman-Fried was convicted on seven counts of fraud and conspiracy.  

Lewis is one of the most acclaimed authors in the investigative business world, with his nonfiction books having earned two Los Angeles Times Book Prizes and countless No. 1 spots on The New York Times Best Seller list throughout his career. But before he was known for acclaimed investigative works such as Moneyball, The Big Short, and The Blind Side, Lewis was once a businessman himself. 

Inspired to write his first book, Liar’s Poker, after starting his career on Wall Street as a bond salesman at Salomon Brothers, Lewis has continued to cover financial crises and behavioral finance, including in positions at The Spectator, The New York Times Magazine, Bloomberg, Vanity Fair, and more. 

Yet, when Lewis first met with Bankman-Fried in the process of writing Going Infinite, he wasn’t sure what to make of the situation. “It can often take me a year to figure out if there’s a book in something,” he said. 

It was after spending more time with Bankman-Fried that Lewis realized there was a story to be told. Bankman-Fried considered himself to be an “effective altruist,” Lewis said, and aimed to become the “the most important person” in this cult-like movement. Originating around the same time as BitCoin, effective altruism emphasizes one’s duty to serve others and “earning to give.” The problem with this utilitarian-like movement that “aims for good,” according to Lewis, is that it strips out human sympathy and justifies incivility toward colleagues. 

As a result of expecting everyone to “manage themselves,” Lewis explained, Bankman-Fried became more of a “figure” than a leader. In fact, despite having 140 venture capitalists investing, FTX neither had a CFO nor a board of directors. 

“The reason that he was able to just run through the world without having the ordinary checks imposed upon him is that the thing was actually so successful,” Lewis said. “The venture capitalists looked at it and said, ‘Alright, this is different. And yes, something bad might happen, but the bad thing happening is not nearly as bad as us missing out on the next Google.’” 

It was in this context that FTX came crashing down. As a reaction to the financial crisis, the cryptocurrency movement aimed to organize a financial system without the intermediaries and regulators of traditional financial institutions. Coupled with Bankman-Fried’s distrust in org charts—believing they created issues of status—FTX lacked any sort of oversight, instead thriving off of its monetary success with a peak valuation of $32 billion. 

According to Lewis, one of the main takeaways from the story is that “you can’t have financial markets without regulators.” Ultimately, Lewis said he hopes that those who read the book, if anything, take away pleasure from the incredible story of what he describes as a “comedy with a tragic ending.” 

Watch the full Dean’s Speaker’s Series talk.

Read the full transcript:

Professor Jennifer Chatman: Welcome to the Dean’s Speaker Series.  Yay. Go Bears. This is an event that’s actually co-sponsored by the center that I co-direct with my colleague, Sameer Srivastava, the Center for Workplace Culture and Innovation. And I’m Jenny Chatman. I am the acting dean at the Haas School of Business, and I am absolutely thrilled to welcome today Michael Lewis, the renowned author. We know him well. He almost needs no introduction. This morning I was thinking about my favorite book of yours, “Flash Boys.” Is that a weird choice?

It’s a weird choice. I remember I bought it, I was coming back from a large eastern school, and at Logan Airport, I picked it up, and I had all this work to do on the plane, and instead, I opened the cover, and I read it from coast to coast and did zero of my work; so it was, as usual, a gripping book. So Michael’s style, as you know, is to use real-life characters to kind of open up a world of mystery and intrigue. His books are stranger than fiction, and they are so gripping that many of them have been made into Hollywood films, including, pick your favorites, “The Blind Side,” “Moneyball,” which I use in my classes, and “The Big Short.” So Michael, thank you so much for spending some time with us and visiting us here at Haas. It’s great to have you.

Michael Lewis: I’m surprised you didn’t explain how far back we go. I mean, our kids were in school together starting, what was it, preschool? Or was it kindergarten?

Chatman: Well, so we were actually, if truth be told, we were the host parents, and actually, my husband Russell and I, we were host parents to your family coming into the school that our kids went to in kindergarten. And I had no idea who Tabitha was or Michael Lewis. Coincidentally, I had the book “Liar’s Poker” on my nightstand, and they came over for dinner, and I’m asking like, what do you do for a living? And he’s like, “Oh, I write books.” I’m like, “Oh, have you written anything I would know?” “Yeah, “Liar’s Poker,” “Moneyball.” And I’m like, “Oh, you’re that guy.” And I didn’t bring my book down because for some reason my Amazon order came back, sorry, it was Amazon. It came back as the easy-read version. And I’m like, look like I’m 900 years old with this easy read. It was a mistake. But, so we do go way back. And I think you and Russell have cooked pancakes together in—

Lewis: Many times.

Chatman: Various camping sites. So let me just offer some logistics here. We have cards on your seats. If questions occur to you, please pass them to the side. I think, Audrey, if you want to raise your hand, and Sarah. They will be picking up those cards and later we will have time to read those. Be sure to write your name and what program you’re in or what kind of member of our Haas community you are so that we can acknowledge you. And then, finally, before we dive in, I just want to thank a few people for putting these events together. Ooh. One is Sarah Bottger, who does a fantastic job in putting our whole dean’s series together. Thank you, Sarah. Carrie Hults and Audrey Jones have been instrumental in putting this together. So thank you guys so much. OK, so let’s talk about “Going Infinite,” and I—

Lewis: We can talk about anything.

Chatman: Yeah, I know—

Lewis: But, yes. This book is—

Chatman: Because I’m obsessed.

Lewis: Yeah.

Chatman: With this book, so, you may notice that it’s like not even really been opened, but that doesn’t mean I haven’t read it. I actually listened to it for the last two weeks. Michael is the narrator of the audiobook, which is unusual. And they keep saying, when they do the credits, they say, “performed by Michael Lewis,” which is so fun. So you’ve been in my ear for my long runs for the last two weeks, and it’s really a fascinating book; and, of course, has coincided with the events of Sam Bankman-Fried’s fate—emerging fate. And so, why don’t we start with that?

Lewis: Sure.

Chatman: I have some other questions.

Lewis: Yep.

Chatman: OK. So, if you’ve read the book and if you’ve gone to business school, you have thought a lot about expected value calculations. And so my first question is, why did Sam let you write a book about him? What do you think his expected value calculation was for that?

Lewis:  So, I think it was complicated. Is everybody, I mean, I don’t know how much background we need to give people. Does everybody know who Sam Bankman-Fried is in here?

You know, it’s funny, I was in Portland this weekend at a literary festival. It was people who read novels and even poetry. And there were 1,200 people in the auditorium. And I thought, and the person started with this a question that just presumed that the audience knew what FTX was and crypto trading. And I said, “Well, just stop a second.”

Chatman: Yeah.

Lewis: “Does anybody here not know who Sam Bankman-Fried is?” And they go, they all go, “No, we all know.” And it’s just amazing.

Chatman Yeah.

Lewis: The reach of this story.

Chatman: And so if they know, these guys definitely know—

Lewis: These people definitely.

Chatman: OK.

Lewis: These people are ready. So, I’ll tell you how I came about. Came about right here in Berkeley. And he came over to my office because a friend, the Brad Katsuyama, the hero of “Flash Boys,” the main character of “Flash Boys,” called me and said, “I’m about to swap shares with FTX.” And I said, “What’s FTX?” He said, “It’s the fastest growing financial business I’ve ever seen, and we’re going to exchange $300 million of shares in IEX.” Our stock trading, stock exchange with this guy. And he says, “My problem is, I don’t know this guy. I mean, I met him, but he’s odd, and I can’t, I don’t, I’m having a hard time getting a kind of read on him, and nobody knows who he is.” Eighteen months ago, he had no money, and now, he’s worth $22 billion, and he’s in Hong Kong. He says, “Could you sit down with him and just give me a view?” And I took him on a walk up til then for two hours, almost killed him. I mean, this whole scandal could have been avoided if I just took him on a three-hour walk. But he, I mean, he shows up, he showed up, but he comes out in his hiking shorts and his T-shirt. I thought, “He wants to go for a hike. He’s never been on one.” You know, he’s always dressed for one and never taken one. And, he, we go on this walk, and by the end of the walk I was already, I already thought character and situation is as good as it gets. He was—the situation was so bizarre. So I, we can get into why I got interested, but why he was interested is a different question. Because at the end of it, I said to him, “I didn’t know there was a book, I didn’t know what there was.” It often takes me, it can take me a year to figure out if there’s a book in something. But I said, “I just want to come, can I just come along and watch?” I don’t know why I said, “I don’t know what’s going to happen to you, but I want to watch, ’cause what’s happened already is incredible.” And he said, “Fine.” Now, he never once explained to me why he said “fine.” He never once asked me what I was doing or why I was interested. He never once asked, when I’d ask a question, “Why do you want to know that?” He never once asked to see—he didn’t see the book until he got it smuggled into him in jail a week after it came out. So he had no idea what I was up to. But I think what he thought, what he would’ve told his colleagues who were saying, a few of whom were saying, “Why are you letting him in?” was we are on a quest to be the legitimate crypto exchange. The big, the holy grail is to be regulated in the United States to get the approval of the SEC or the CFTC to open a crypto futures trading platform, and those people read Michael Lewis’ books. Now, this was, so that’s the official answer. I think the answer is, he read “Moneyball” when he was a little kid. He was a completely isolated nerd among nerds. He was a person who could read “Moneyball” and think, “Oh, there’s a place for me in the world.” And for some months in his childhood, he wanted to be a baseball general manager, and he got obsessed with baseball statistics. I know this not from him; I know this from his parents. And I think that because I reached him when he was a little kid, he felt some odd connection, and so that he was interested for that reason. But then, of course, what happens is that I become a nuisance in his life. I mean, I spent, I don’t know, I commuted to the Bahamas. I was commuting from here to the Bahamas. I spent 60 nights there over the course of, and I insisted on traveling with him around the country here, and so on and so forth. And I think then, what happened was, what happens with all the subjects, they’re three months in, and they realize it’s too late to turn around. Like they, I’ve seen too much and know too much and like I may be a pain in the neck to have around, but we’re too—it’s too late.

Chatman: Yeah.

Lewis: I had a number of subjects give me that look, like, “How did you do this?” Like, “How did you get this far in?” And we can’t just chuck you out now. I remember Billy Bean actually saying that to me, and, but I think, so I think it just got to the point where it had its own momentum and he let—and som I was there. I mean, where it gets particularly odd is last November, exactly a year ago, almost today, when FTX is imploding, the only people, all the employees have fled the Bahamas. And it’s me, his psychiatrist, him and his parents, and one employee with the COO who’d stuck around to kind of investigate him. But, and that was kind of, I was that kind of in, so it was a privileged ring. It was a privileged view of a bizarre story.

Chatman: Yeah. Yeah, I mean, you write about this effective altruism movement that Sam kind of identified with.

Lewis: Yeah.

Chatman: Right?

Lewis: More than identified with. I mean to appreciate the weird, the media sort of flattens the story.

Chatman: Yeah.

Lewis: And the trial certainly flattens the story. Like, I don’t think the phrase effective altruism was uttered in the courtroom. The jury never would’ve learned that all these people they were hearing from were united by a cult-like belief in this thing. And, so they never got them, the motive. But if you want to understand Sam Bankman-Fried, you’ve got to understand the movement.

Chatman: Yeah.

Lewis: And the movement starts basically when Bitcoin is created. Same kind of year period. And it’s a movement that grows out of work that was done. I mean, it grows out of utilitarianism, but papers that were written by an Australian philosopher named Peter Singer, who was at Princeton when I was actually at Princeton.

Chatman: Yeah.

Lewis: And had a mesmerizing effect on students because he was sort of asking young people, “What’s your obligation to the world? And he would, he started, I think the first paper he wrote the story that kind of hovers in the background of the effect of altruism movement. It’s an anecdote that Singer has in this first paper, where he says, “I’m going to put you in a moral quandary. You’re walking by a pond and you see a small child drowning. You’re wearing your brand-new, $300 shoes. Do you hesitate to take off your shoes before you jump into the pond to pull the child out, who’s drowning out of the pond? Of course, you don’t, you just, you go in and you, the shoes are ruined. So why do you hesitate to, instead of buying those shoes, take the $300 and send it to some poor country in Africa where it would save a child’s life?” And he, so he creates, he created a lot of moral discomfort in a lot of young people, but it never led to any action. I can remember hearing about this guy and people kind of coming out of his class thinking, “I’m rethinking my responsibility to like total strangers.” This, these Oxford philosophers in 2009, a particular one named Toby Ord start to write papers where they say, “We’re going to make, we’re going to take action on the back of Peter Singer’s work,” and Ord writes this paper where he says that, he shows that if he just took half his salary, which he said he intended to do, his academic salary over the course of his lifetime.

Chatman: It’s huge, absolutely huge.

Lewis: Huge, giant Oxford salary, right? I mean, look at you. You’re I mean, you put it into clothing. He was putting into, he—

Chatman: But I would actually take my shoes off because, right? You could swim better if you didn’t have your shoes on. So you could kind of do both.

Lewis: Oh that’s very funny. And you’d be so much faster that the time, yeah.

Chatman: Spoken like a Claremont member swim club.

Lewis: Yeah. Right. Right. Yeah. But they make this argument that they make this, they start essentially proselytizing the idea to young people that it’s a combination of your duty to the world, to other people. And also the twist that really gets inside of the heads of the mathy, sciencey kids that they attract, is that: “We are going to be rigorous about the altruism.” We’re going to actually start to measure the effects—

Chatman: Right.

Lewis: Of the various things you might do with this money. And we’re going to measure it in terms of, I mean, they developed some pretty kind of obstruent units of measurement, but quality life years saved or whatever it is. So you can start to do analysis about, you can measure your performance as an altruist. And Sam Bankman-Fried hears one of these philosophers give a talk when he’s a junior at MIT. And he just thinks that’s right. And they’d done it by, this is 2012, but they, what the philosophers had done at that point, was started to make an argument to especially young American college students—college students in the typical was like math or science at MIT or Harvard or Stanford or here. And the argument was: “If you’re thinking about what you’re going to do with your life, and we’re going to be rigorous and analytical about this, stop thinking about the direct good you would do.” Like, don’t think about, oh, I don’t know, going to be a doctor in Africa. Think about earn to give.

Chatman: Right.

Lewis: Think about this idea that you, hey, “You’re appealing to high frequency trading firms. You can make millions of dollars in the course of your career. Go do that to give it away.” And what I remember when I first heard about this, I was at some Wall Street Conference, and someone came up to me and said, “You’ve got to know about this. You know, we’ve hired a couple of kids, and they’re here because they say they want to make money to give it away.” And this was so perplexing to this Wall Street guy. It was like, no one, I, and it was like the first time in the history of Wall Street.

Chatman: Yeah.

Lewis: That people go to Wall Street to give it away. And actually quite seditious in a way, the point where it actually makes the firm that Sam Bankman-Fried goes to work for.

Chatman: Right.

Lewis: And a bunch of other effective altruists go to work for.

Chatman: Right.

Lewis: Uncomfortable.

Chatman: Right.

Lewis: ‘Cause they sort of, the lever they usually have on the employees is not there anymore. They’re doing it for a different kind of purpose. But, the high frequency trading firms who are recruiting people like Sam Bankman-Fried are sort of fishing in the same pond as the effective altruists philosophers. That they’re looking for mathy, sciencey—

Chatman: Yeah.

Lewis:  You know, analytical young people. And so a lot of these people end up doing what Sam does, going to high frequency trading firm, and with it to earn, to give.

Chatman: Yeah.

Lewis: Now, there’s a whole, we don’t probably want to go off on this too much longer, but there’s a whole turn that that movement—the effective altruism movement—takes, which amplifies the ambition of the people in effective altruism, amplifies it beyond, it’s, they stop thinking about, it’s, so, there’s this cult-like quality, the people—

Chatman: Right.

Lewis: Who become effective altruists. But it’s a kind of anti-cult cult because it’s a cult that’s based on reason and argument. And if you, and unlike a lot of cults, if you win the argument, you can change the cult. And at some point someone wins the argument and the, an argument, and the argument is, “OK, you, we’ve been talking about maximizing the number of lives you’re going to save with the money you make, doing whatever you do. But we’ve been talking about saving the lives of people who are here, now.” There is this problem with existential risks to humanity.

Chatman: Right. Right, right.

Lewis: And it takes many forms. There’s all these risks, this climate change and artificial intelligence and some really horrible pandemic. Something that would wipe out the species, asteroid strikes. If you could do anything to, the argument goes, “If you could do anything to reduce the risks of any of one of these things, you will have saved many, many more lives in the future. Then you could by just focusing on the here and now.”

Chatman: Right.

Lewis: And this decouples even further.

Chatman: Right.

Lewis: The actions that people are taking to do good from the recipients of the goodness.

Chatman: Yeah.

Lewis: It sort of completely strips the action of human sympathy.

Chatman: Yeah.

Lewis: And this is perfect for Sam Bankman-Fried, ’cause he has no human sympathy.

Chatman: Yeah, yeah, yeah.

Lewis: And it’s, but you can’t understand why he’s doing what he’s doing, unless you understand he’s completely, this isn’t phony. He’s complete, he eats, sleeps, and breathes this movement. And his ambition is to be the most important person in this movement. But it’s not like he’s just faking it.

Chatman: Well, I mean, in some ways, I wonder if that was a way that he felt invulnerable. Right, because these grandiose means just, ends justified the means. And in a sense, you could justify—

Lewis: Anything. Yep.

Chatman: Almost anything, including buying most of the luxury housing in the Bahamas and being uncivil to your immediate colleagues who are in front of you. If you imagine you have the greater good in mind and you have the, I’ll call it con—

Lewis: It does let you off hooks.

Chatman: I’ll call it confidence for the moment. But it could border on arrogance to be the one who decides what those existential problems are and how you’re going to prioritize them. I mean, that’s a pretty—

Lewis: You know, he reminded me of somewhere in the middle of kind of figuring out what the story was before I’d start writing it. So I didn’t start writing this ‘til January. So I—

Chatman: Wow.

Lewis: I didn’t really, and I didn’t commit to do it until after it all collapsed. But somewhere in the middle of it, I thought, “I’m watching some odd prelude to the dystopic, some odd foreshadowing of the dystopic artificial intelligence story,” where you, one dystopic artificial intelligence story is, you tell artificial intelligence to do something that you think is good, but you don’t tell it how to do it.

Chatman: Yeah.

Lewis: And so there are no guardrails. So you say, “Could you get me a reservation for dinner tomorrow night at Chez Panisse?” And you don’t say anything else, and it goes and finds that all the tables that Chez Panisse tomorrow night are booked and starts murdering the people who have tables.

Chatman: Right. Yeah.

Lewis: To get you a reservation.

Chatman: I’ve done that.

Lewis: This is Sam, but I thought this is Sam Bankman-Fried. This is just like—

Chatman: Right.

Lewis: You told him what to do—

Chatman: Yeah.

Lewis: But you didn’t tell him how to do it.

Chatman: Yeah.

Lewis: And there’s a, there was a whiff of that about him that was—

Chatman: So—

Lewis: Fun to watch.

Chatman: So, let me try this out on you. So, we have four defining leader principles at Haas that we hold one another accountable for. I don’t know if you saw those when you walked in on our building. We etched them in stone to show that we’re quite serious about them. And I tried to kind of analyze Sam using our four defining leader principles.

Lewis: I knew this was going to happen. This is good. I’m glad this is going to happen, but I knew that eventually my book was going to be a business school how not to book.

Chatman: Well, I know I’m not even sure that’s not actually where I’m going.

Lewis: OK. OK. Go ahead, I’ll listen.

Chatman: But—

Lewis: I’ll try to listen. I’ll listen. Alright.

Chatman: And I am using “Moneyball,” I’m not using—

Lewis: OK.

Chatman: “The Big Short” or any of those in my classes. So yeah. So, OK, so let’s try this out. You all keep me honest, ’cause you know about these four defining leader principles. So he was a student always, right? That’s one of ours. He was a puzzle solver and clearly learning over time as he was going through this journey in the cryptocurrency world. He was thinking beyond himself, we could say as an effective altruist. He was questioning the status quo. He was trying to bypass traditional institutions and regulation, which he had no—

Lewis: Completely true.

Chatman: No interest in.

Lewis: Right.

Chatman: But alas, the last one, which is—

Audience: Confidence without attitude.

Lewis: Wait, what is it?

Audience: Confidence without attitude.

Chatman: Confidence without attitude.

Lewis: Oh.

Chatman: So we like to think of ourselves as a contrast. There’s institutions that have confidence with attitude, right? We have confidence without attitude. And we think that that combination is important. And that’s the one I think you could observe Bankman-Fried as falling short on. And I have to admit I do research on narcissistic leaders, and I have to admit that I could see a narrative in which Bankman-Fried is a narcissist. He’s also sort of an unassuming cult leader, right? That he didn’t intend, but we’ll hold that aside. So narcissistic leaders often prioritize their own success over the success of others. They forego collaboration for their own grandiose ideas. Like, I noticed his advisors would give him advice, and he wouldn’t necessarily take it. And sometimes they would engage in even ethically questionable behavior. They believe that pedestrian rules that apply to other people don’t apply to them. And I think his intellect caused him to think he kind of rose above that. So, do you think there’s anything to the idea that Sam Bankman-Fried is a narcissist?

Lewis: You know, yes. But it, there’s something to the idea. It’s, so, let’s a little, here’s a, is a fun exercise that I engaged in, he and I were talking about. He was obsessed with Donald Trump. I used a, he on the list, to the list of existential risks to humanity that he was handed by the Oxford philosophers. He adds Donald Trump because he thinks that if Trump is president, American democracy is at risk. And without democracy, you’re not going to solve all these other problems. They are much less likely to solve all these other problems. And so he was constantly kind of trying to get inside Trump’s camp. Trump’s mind. He’s trying to pay Donald Trump not to run for president.

Chatman: I heard the number was $5 billion.

Lewis: $5 billion is where they were. But you know, when Trump was—

Chatman: For Trump not to run.

Lewis: And I’m almost certain that they were negotiating, I don’t know this, but I’m almost certain with Donald Trump Jr., because Sam’s, one of the senior executives at FTX, was friends with Donald Trump Jr., and I think that was their path into the Trump world. I’m not sure if the numbers ever actually got to Trump, but I, when he’s, when he was telling me about that, my first thought was, “You don’t really think Donald Trump’s going to take your $5 billion and then not run for president.”

Chatman: Yeah.

Lewis: You know what he’s going to do? He’s going to take your $5 billion and run for president. And so, but—

Chatman: Call it a witch hunt.

Lewis: But that, but yes, whatever. But that part, but it was interesting to watch Sam talk about Trump, ’cause he got Trump, and he got Trump because he rhymed with Trump.

Chatman: Yeah.

Lewis: But he was a little different from Trump. So, Sam’s behavior can read from a distance as narcissism, because in the narcissist, he looks like he’s thinking because he’s not thinking about other people. Sam Bankman-Fried is born without the natural complement of human feeling and is completely aware of this fact. He replaces the, I mean the normal mechanisms that you or I use to get moved through the world. A lot of emotion, a lot of intuition, a lot of feeling. He replaces it with a kind of mathematical calculation.

Chatman: Right.

Lewis: Does it very consciously. Because he’s sort of like, it’s almost like being colorblind. He’s lacks empathy. He lacks—he doesn’t feel pleasure. It’s like there’s something he’s born without some equipment. I’d say the difference between, so that reads as like he doesn’t care about you.

Chatman: Yeah.

Lewis: And that feels like a narcissist. You default to, “Oh, he cares just about himself.” But he actually doesn’t spend a lot of time thinking about himself either.

Chatman: Yeah.

Lewis: I think he cares about himself almost as little as he caress about other people. And so, whereas Trump cares about himself constantly, thinks about himself constantly—

Chatman: Right.

Lewis: Sam didn’t spend any time, when you were with him, he wasn’t talking about himself all the time. In fact, almost never.

Chatman: Yeah.

Lewis: He was always out, he was outer-directed. But it could read as narcissism because—

Chatman: Yeah.

Lewis: Because of the consequences for other people were almost the same.

Chatman: Yeah.

Lewis: But the, it was not as, it wasn’t as un-charming as—

Chatman: Yeah.

Lewis: As what you’re imagining.

Chatman: Yeah.

Lewis: Because he was, it was never about, it never seemed to be about him. It always seemed to be about problems or other things.

Chatman: Yeah. Well, and actually, you’re doing some recording. You know, Michael has a podcast called “Against the Rules.” And this season has been about the trial.

Lewis: Well we did, you know what we did is cheat. So “Against the Rules,” the interesting part to me is, there are these scripted, we do scripted seasons, and that’s work and writing and performing all this. This was just the gabfest about the trial.

Chatman: Yeah.

Lewis: That was more run by, sort of my producer, more than me. And I jumped in a few times.

Chatman: Yeah, but one of the—

Lewis: But I was in the—I was at the trial.

Chatman: Right, but one of the things you said was that you noticed how the judge was even becoming more and more interested in Sam Bankman-Fried. He’s a complicated character. And you—

Lewis: There were a couple of moments where I thought the judge was going to toss everybody out just so Sam could explain Bitcoin to him. Because, Sam among, so almost all my, all my characters have certain traits but one of them is for sure, is they’re all good teachers. They’re— you can learn a lot from them.

Chatman: Yeah.

Lewis: And now, in addition, they’re often also in situations that teach you things inadvertently. They aren’t explicitly teaching you. They’re just kind of, like, the way they move through space is educational. But Sam is both. And when he gets talking, I mean this, that, he’s going to be mesmerizing. And the judge—this is a complicated subject. The judge obviously didn’t know what a computer was and was quite open about it. And I mean, he’s 80 years old, and he does, but he’s smart. And so here he had someone who could actually start to explain in ways he understood—

Chatman: Yeah.

Lewis: What this was and there were just a couple moments where you could, thought you could, see that, “Wow,” the judge thought, “This is interesting. I would like to just learn more here.” And it was a, it was a counterweight to the other thing that was going on pretty clearly in the judge’s head, going all the way back to when Sam was put under house arrest and started to do things that annoyed the judge is that the judge just hated him. Like, just, he was so annoyed by him.

Chatman: Yeah.

Lewis: So you could see the annoyance sort of fade a bit when Sam was allowed to talk at length. And so, he was for, took it to judge just a beat to stop him from doing that. You’re not really supposed to do that in the courtroom.

Chatman: Yeah.

Lewis: Because he was interested.

Chatman: Yeah.

Lewis: Yeah.

Chatman: So, I actually, I want to turn around ’cause I was thinking about the comparison between Bankman-Fried and Trump, but from the other side, which is what we look for in our leaders. And why Trump’s, well, I’ll leave Trump aside, but—

Lewis: Yes, leave Trump aside.

Chatman: Yeah, because Bankman-Fried sort of skyrocketed and was best friends with Tom Brady, and people were flocking to him, but his star dropped quickly and definitively. Right, he was convicted within four and a half hours on seven counts. And we don’t see that happening as quickly with Trump, right? It’s a much, much more complicated situation. But what does that tell us about what we look for in people who we want to influence us?

Lewis: That’s an interesting question. Like, what it is, what was it about Sam? Well, so Sam was a, more of a misleader than a leader, that he was not a, he—the leadership was almost accidental. It was, I mean, he, up until the point, he creates Alameda Research here in Berkeley. You know, this whole thing starts in downtown Berkeley with 20 effective altruists, only two, one of whom Sam has any experience trading anything. Like most of them can’t tell you the difference between a stock and a bond. And they’re starting a high frequency trading firm.

Chatman: So I’ll tell you about that rental. Is Mike Riley here? Mike, are you here? So, our executive education director rented the space to them, but he was so worried about what they were doing that he took it all cash upfront, which he had never done before. I just learned that, so.

Lewis: That’s very funny.

Chatman: Yeah.

Lewis: I wish I’d known that.

Chatman: Yeah.

Lewis: So, it’s very funny.

Chatman: You can footnote that in.

Lewis: Yeah. Footnote. But so—

Chatman: No script.

Lewis: So Sam is leading 20-, 24-year-olds who share his effective altruist. It’s a kind of religion. And he’s the only one who’s really traded successfully and can kind of, seems to know what he’s doing at first. But even then, it only takes four weeks before people are running for the exits. That, like this, that he’s got, I mean, he had the advantage of having fellow cult members and being the only one who knew what he was doing supposedly. And it takes a month before half the firm leaves because they’re terrified of him, of what he might do.

Chatman: Yeah.

Lewis: I mean the whole foreshadowing of what happens, no lab, in the, over, with FTX is right in downtown Berkeley where, he seems to know what he is doing then he’s so unbelievably careless with the money. You know, they’ve raised money from effective, $175 million from rich effective altruist, and they seem to have squandered it. And these other people who were, he’s supposed to be leading, start to wonder what the hell he is doing. And he himself has no ability or to connect with people or interest in managing them. His view is basically: You need to be able to manage yourself. And what happens is, in the Sam Bankman-Fried environment, this is a long way of saying, I don’t think Sam actually was exactly a leader.

Chatman: Yeah.

Lewis: He was a figure, it’s different, and in his environment because, look, he built his house on a gold mine. It was true that becoming a high frequency trading firm in crypto in late 2017 was a really good idea. And if you did it well, you made a lot of money. And they did it well enough, so they made, they did end up making a bunch of money. And it was also true that if you created a crypto exchange that people wanted to trade on, that was just a money machine. So there is, he, and it’s kind of accidental that he even does that, that part of it. So he builds his Beverly hillbillies. He builds his houses on an oil field. So there is a mechanism, there’s conditions for success actually building an organization he had no ability to do. And people around him were forever compensating for his—

Chatman: Right.

Lewis: I mean, look, you have the book, right?

Chatman: Yeah.

Lewis: Can you, if you didn’t read the book, it’s funny, you missed something that’s fun. You want to pull the jacket off. If you pull the jacket off—

Chatman: You mean versus your, versus the audiobook.

Lewis: Versus the audiobook, ’cause you don’t see this, pull the jacket off the hardback. So, and show—

Chatman: Oh, there’s the org chart.

Lewis: There’s the org, so—

Chatman: I was looking all over for that.

Lewis: So this is the world, this is the world that Sam Bankman-Fried creates.

Chatman: OK, this we would not teach in our classes.

Lewis: No, this, but this is so when the whole, so to backtrack this is an anecdote, but it’s an anecdote that there are 40 versions of this anecdote in Sam Bankman-Fried land. When the firm collapses and the bankruptcy people move in, one of the things they say is, “Oh my God, there’s not even a list of employees. There’s no org chart. We don’t know who’s here or who did what.” And it doesn’t exist. And the prosecutors even said, they’re like, “We can’t figure out how this place,” they’re trying to figure out how this place worked. And Sam, so Sam had this principled objection to job titles and organization charts.

Chatman: Yeah.

Lewis: He thought that job titles became excuses not to do whatever your job title was, as opposed to fix a problem. And he thought that org charts created status problems between people. And so he just, he forbid there being an organization chart. However, people in organizations need to know where they are. They need to know who reports to them. They need to know who they report to. They need to know where this, the level of seniority, all that stuff makes people, not having that makes people uncomfortable, especially makes Chinese people uncomfortable. And half the employees were Chinese, or a whole bunch of ’em were. I mean they’re like, in the Chinese companies, the org charts are a really important thing. He, so Sam, as a result of not having any of this organization and not managing anybody, not conventionally leading anybody, Sam has all these psychological emotional issues in his company. Like, everybody’s kind of unhappy.

Chatman: Yeah.

Lewis: And so, to solve them, he solves the problem in a very Sam Bankman-Fried way. He moves his personal psychiatrist, his shrink from here to the Bahamas to be the shrink to everybody. And so sort of like George, his name is George. You deal with all these problems that are caused because of the way I run my company. George, who in the Bay Area had become shrink to the effective altruists. So he was the world’s authority on the inner life of effective altruists. George moved to the Bahamas, and within about six weeks, 100 employees of FTX are on his couch.

Chatman: Yeah.

Lewis: Like, that many people, all wanting to share their problems and the problems all kind of went back to like, there’s no—

Chatman: And he drew the chart, right?

Lewis: So George in therapy starts to ask people where they are.

Chatman: Right, where they are. And what you can see here is that there’s just one box at the top, one box. And all the other boxes are below that one box, which is Sam Bankman-Fried.

Lewis: And he’s got 24 direct reports, none of whom he talks to. And he’s got a CTO who’s over here, Gary Wang, who has no one underneath him because Gary doesn’t speak. And it’s like, and George is figuring out like a psychiatrist, trying to think about t. is thing. And George does this completely in secret because he’s worried Sam’s going to be angry if he finds out that he’s created an organization chart. So before George fled, he’s now hiding in the jungles of Vietnam, I think. But before he fled, he gave this to me on a thumb drive, and my publisher said, let’s stick it on the inside of the jacket cover.

Chatman: Oh my God, that’s so funny.

Lewis: But that’s like, the best picture of the organization. And it’s a little warped because it was done by the shrink based on therapy sessions. But it was, this is like, I don’t know, I what do you do in a business school with this story? You like, hand it to somebody or say read it and never do any of this.

Chatman: Yes, that’s what you do.

Lewis: It’s kind of like—

Chatman: Yeah.

Lewis: I think it is the way you think about it.

Chatman: There are lessons. I mean, I have so many more questions, but I want to get to some of the audience’s questions. So let me finish with this question, which is sort of unresolvable. But you know, on the one hand, we’re a school that embraces entrepreneurship and pushing the boundaries and questioning the status quo and doing what hasn’t been done before. And there’s a way in which you want the Sam Bankman-Frieds of the world to succeed and to push new frontiers and try new things. And the promise of blockchain—there’s something idealistic there. On the other hand, there was essentially zero regulation, which seems to be, at least in part, responsible for all of the negative things that ensued. And so, what have you learned about that balance, right? Should the investors have been much more wary? Is it their own fault that they invested in this operation? Should the government regulators have been on top of it sooner? Should we have clamped down on Sam Bankman-Fried and FTX sooner? I mean, where does that happen in the world of evolution and progress?

Lewis: Well, crypto, I mean, all crypto is created in an opposition to regulation.

Chatman: Right.

Lewis: It’s created an opposition to institutions, to governments, to banks. It’s a reaction to the financial crisis, right, in the beginning. So, it was explicitly anti-regulatory. It had this libertarian streak, and it was in theory, a different way to organize a financial system without all these trusted intermediaries and without the need for regulators, right? But then, what it did very oddly and tellingly, is it recreated the financial system.

Chatman: Yeah.

Lewis: The traditional financial system inside of crypto but without the regulators.

Chatman: Yeah.

Lewis: And so what has resulted is scandal after scandal after scandal. And presumably a lot of things, bad things going on that nobody’s caught because there’s nobody there watching and policing.

Chatman: Well, and it looks kind of like, when you boil it down, it looks like old-fashioned fraud, like commingling funds and investing with your clients.

Lewis: What’s amazing, I mean, this story is so amazing. I regard, I didn’t know quite what to do with the structure of the story because, so Fitzgerald once said, “What Americans really want is a tragedy with a happy ending.” What this was was a comedy with a tragic ending.

Chatman: Yeah.

Lewis: It’s like the opposite of what, the whole thing felt so comic until it, until what happened, you know—

Chatman: Right.

Lewis:  The last year, but, when they start they start, it doesn’t even, I don’t think it even occurs to them that the fact that there’s no distinction between Alameda Research and FTX is that big a deal. They’re an Asian Crypto Exchange. I don’t think any of the Asian crypto exchange has instituted these kind of controls that you would have—

Chatman: Yeah.

Lewis:  In a U.S. exchange. I mean, just the idea that the exchange custodies the traders’ funds, that’s something that’s alien to the U.S. markets, right? You just wouldn’t be allowed here. It’s much less, you can own the biggest trader on the exchange at the same time that you’re custoding the funds on the exchange. All the whole structure’s nuts. And nobody even really questions it. What, if you want to, I’m trying to think of the best way to answer your actual question though is like, “What does it tell us about the, like what should have happened?” And probably what should have happened is the minute serious grownups started to turn up on the scene, venture capitalists, for example, 140 venture capitalists invested in this business, valued it at the end at $40 billion without insisting on there being a board of directors.

Chatman: Yeah.

Lewis: There was no board of directors.

Chatman: I mean, there was no CFO, right?

Lewis: There was no CFO.

Chatman: No CFO, OK.

Lewis: In fact, there’s a line in the book I asked, I was asking Sam about all this right away. And it was, he was, it was comic. He says, what, he says, “They tell me I need a CFO.” I asked him, “What does a CFO do?” And they said, “The CFO keeps track of the money.” He says, “I keep track of the money. Why do I need a CFO?” Well, we saw how well he kept track of the money.

Chatman: Yeah. Right.

Lewis: Right. And, but, no, but the reason that he was able to just run through the world without having the ordinary checks imposed upon him, is that the thing was so actually successful.

Chatman: Yes.

Lewis: That the revenues generated—

Chatman: That’s right.

Lewis: By the exchange were so crazy that the venture capitalist looked at it and said, “Alright, this is different,” but if, and yes, “something bad might happen, but the bad thing happening is not nearly as bad as us missing out on the next Google.”

Chatman: Yeah.

Lewis: And I had, I don’t know how many venture capitalists tell me this might be the next trillion-dollar company.

Chatman: Yeah.

Lewis: And Sam may be the first trillionaire.

Chatman: Yeah.

Lewis: That they thought it had that kind of scope. And so, it tells you about like how loosely the, our conventional world holds its principles.

Chatman: Right.

Lewis: That if when they’re faced with an incredible—

Chatman: Right.

Lewis: Temptation—

Chatman: Yep.

Lewis: That you drop the principles. And it wasn’t just the institutions that did this. Everybody, the celebrities did this, politicians did this.

Chatman: Yeah.

Lewis: There was a kind of a fear of missing out on a thing. And the thing was fun, and it was going, moving fast. And Sam was kind of delightful to be with every time—

Chatman: Yeah.

Lewis: He walked into a room. Everybody wanted to listen to no one but him. And—

Chatman: And the numbers were enormous. I mean, so they were thinking the money in Alameda was like—

Lewis: They were thinking—

Chatman: Rounding error.

Lewis: Yes.

Chatman: $8 billion. What? That’s nothing. We could cover that in 10 minutes.

Lewis: So, but the, so the, it does, I guess one of the takeaways, it’s one of the boring takeaways, but it is a takeaway from the story is, “Yeah, you can’t have financial markets without regulators.” I mean, they’re not going to work. They, you’re going to have violation of trust after violation of trust.

Chatman: Yeah.

Lewis: And funny, if you look at our financial market, at the traditional financial markets, we’ve done a pretty good job at minimizing the amount you have to actually trust somebody, right. Because the regulators—

Chatman: Right.

Lewis: They’re watching them for you, because you’ve got things like deposit insurance and crypto, oddly born out of complete mistrust of—

Chatman: Right.

Lewis: Of the existing financial system. Born out of a kind of mistrust of other people, created to sort of end the need for trust, creates these institutions that require us to trust them even more.

Chatman: Yeah.

Lewis: It’s a strange event.

Chatman: It’s ironic.

Lewis: It is ironic.

Chatman: Yeah.

Lewis: Anyway, I, the, if I wanted to convey to an audience, like, who hadn’t read the book, the main thing I wanted them to take away from the book, is just pleasure. The story is so incredible.

Chatman: Yeah.

Lewis: I don’t know what lessons there are in here.

Chatman: Yeah.

Lewis: But it’s just like an amazing story.

Chatman: Yeah. Well as a psychologist, he’s such an interesting character.

Lewis: Yeah.

Chatman: Yeah. Is this Austin here? Austin.

Audience 1: He’s over here.

Chatman: Oh, Austin. Hey. Austin’s going to ask some questions from the audience.

Lewis: Are these curated?

Audience 1: Maybe.

Chatman: By Austin in real time.

Lewis: Right. Good.

Chatman: He looks trustworthy.

Austin: I would not say the same. So, we’ll change that just a little bit. We’ll switch over to “Moneyball” for a bit. You mentioned that Sam was part of the “Moneyball” generation—also included in that is me. I was 8 when the book came out and then ended up spending some time working for the Milwaukee Brewers. And one of the things I noticed, and granted I had never worked in a front office before, but compared to what you described in Oakland to what I experienced in Milwaukee, the front office was very white. It was very male. Didn’t have, instead of it being all ex-players, it was a mix of some ex-players and people like me, who had maybe played in college, but were, there’s totally to do analytics. Over the past few years, and from some of my buddies who’ve worked at the Dodgers, we’ve seen this change into becoming almost the Ivy League Boys; Club, instead of it being the Baseball Boys’ Club, it’s the Ivy League Boys’ Club. That’s still problematic in my view. So, what would you recommend baseball do to try and fix it to be more representative of maybe just the fan base of the game?

Lewis: Yeah, I don’t know. I don’t know if it has to be representative of the fan base of the game to be good management, but you’re touching on something that’s really interesting to me. So, it is true. in 2002, when you walked into the front office, it was, the dominant culture was the scouting culture. You, it were kind of people who had played in the Minor Leagues, very seldom actually former Major League players, but people who were college players, people who hadn’t valued their formal education very highly. And the, and it was an old boys’ club as opposed, and it’s become a new boys’ club. The problem with the old boys’ club was that it was impervious to like new ideas. It didn’t have any that, the amazing thing about the “Moneyball” story was that it was available to be written in 2002 when most of the ideas that were going to transform the game had been cooked up in 1977. And that for 20-something years, or little, until the Oakland A’s started to grab these ideas that nobody thought they were worth paying attention to, ’cause they were hatched by people who were outsiders. So there was, the revolution happens outside the game. The inside is arrogant, smug, all kind of the same, monoculturey, and so doesn’t assimilate these new ideas. What’s happened? It’s like, “Yeah, the management’s now smarter. It’s, it is better managed.” It is true that relying on better data and better analytics gets you a better outcome than just relying on the intuition of the old boys. But you do lose something, and you, there is sometimes something to that intuition and you lose, you do create an environment where everybody’s kind of thinking the same way all over again. It’s just a, it’s a different way, but they’re all thinking the same way. And I think introducing, I mean the important thing is a kind of intellectual diversity, and you can get that a lot of different ways. But opening what has become the, I mean the nerds are now running the show in baseball, opening that room to some people who aren’t, it seems really important to me. And I think even Oakland A’s would tell you that right now. Yeah.

Austin: Perfect. So then one final question, we’ll build off of effective altruism. It’s something we’ve kind of seen before throughout the, I guess the Silicon Valley mindset. We’ve seen with Elizabeth Holmes thinking that Theranos was going to be this revolution that would change health care forever. Andreessen Horowitz uses the word techno optimistic manifesto. Does this just seem like a rationalization of Silicon Valley save the world, and maybe Sam kind of fell into that? Or do you see Sam as a different character who fell into something completely unique?

Lewis: So I don’t think Sam is principally a Silicon Valley character. I think of him as a creation of Wall Street. That if Sam, virtually any other period of human history, Sam would either have been someone’s food or would’ve been like a high school physics teacher or a math teacher or maybe a college professor. The—

Chatman: Hey now, come on.

Austin: Continue.

Chatman: It’s OK.

Lewis: Not a good college professor.

Chatman: Yeah, no, he’s super smart.

Lewis: No actually, I think he’d been a great college professor.

Chatman: We currency—

Lewis: No, I think he’d been—

Chatman:  Intelligence.

Lewis: I think, think he was born, his parents were professors, kind of assumed he was going to be a professor. He ends up disdaining professors like he just disdains every other grown-up and everything that’s ever been thought or said, including Shakespeare. I love that Sam Bankman-Fried, when he is in high school, argues that Shakespeare sucks. And you can—

Chatman: Yeah.

Lewis: You can prove this statistically.

Chatman: Yeah.

Lewis: It’s just like, it’s just a different way of thinking about the world. So, why isn’t Sam Bankman-Fried just in that role as opposed, and it’s because Wall Street evolved to, got to a point where, has gotten to a place where the things that Sam Bankman-Fried’s mind can do, are highly valued on Wall Street. And there are these institutions, especially the high frequency trading firms, that have become machines for turning math people into money people. And he, I don’t think Sam Bankman-Fried, would’ve ever have landed in Silicon Valley and started a company. People would’ve left after two days. You know, that I didn’t have the company, he didn’t really have that management creator sort of gene. What he had was the trader in him. And so, yeah, he interacted with Silicon Valley ’cause he was raising venture capital. He didn’t think much of it, but that doesn’t, there’s a long list of things he didn’t think much of. So, but I don’t think, I don’t think that’s where, that’s he doesn’t really, he’s not a creature of the place even though he is born out here. He’s a creature of modern Wall Street, and it’s modern Wall Street that has a bit to answer for in him. Not really Silicon Valley.

Chatman: Yeah. Great. Well with that, before you leave, I wanted to, so Michael is actually a big swimmer, and he’s actually pretty fast.

Lewis: So that’s, neither one of those things is true.

Chatman: You know for, he’s pretty—I see him in the pool—he’s pretty fast. I was going to say for people of our generation—

Lewis: So—

Chatman: And so we’re a public university, and we don’t have a lot of cash, but we do have a ton of talent. So, I brought a great crew here to thank you for visiting with us today. We have three of our world class swimmers. We have, and you guys come up as I call you, we have Bjorn Seeliger. Bjorn is a Haas undergrad student. He’s on the Cal Men’s Swim Team, who, they’re two-time defending national champions. So, and I’m just going to go through this for a second. So Bjorn swims—

Lewis: Hey, good to meet you.

Chatman: Michael, you need to listen to this.

Lewis: I’m listening.

Chatman: Because this is going to humble you. So Bjorn swims, Bjorn is a sprinter. He swims free, fly, back, and was an Olympian for team Sweden in the 2020 game. And I just wanted to give you some time. So his, the fastest, and I may not be right about this, but the fastest 50-meter free. And actually Bjorn helped me with backstroke, not, it’s didn’t really help that much but, his fastest 50-meter free is 18 seconds and 71 10th. Is that right? Is 18.71, is that your fastest?

Seeliger: 18.21.

Chatman: 18.20, Oh, sorry. So much lower. Right. OK. So think about your time compared to that. Then we have Tyler Kopp, who is also a Haas undergrad, also on the men’s team, also part of our NCAA Championship Team. He was a finisher at the U.S. Olympic trials. He’s a long distance swimmer. That’s more of my world. So he swam a 16.50. That’s if you have a, like a regular sized pool. My pool, 75 laps. He swam that in 14 minutes and 58 seconds. OK. Seventy-five laps. Right. Takes me up to three days or so to do that. And finally, we have Will Roberts who transferred to swim at Cal. You were at Michigan before, right? Is that right? So Will transferred for graduate school. He was part of the NCAA team as well. He is also a distance swimmer and I saw a 500-free time, which is 20 laps of 4 minutes, 17 seconds, 20 laps. He’s now working in San Francisco and helps athletes start businesses. So, the three swimmers have some gifts for you to thank you for coming to visit.

Lewis: Thank you, so—

Seeliger:  I liked to mention something. So you’ve mentioned that you almost killed, you almost killed Sam Friedman on a two-hour walk. So, we want to make sure you don’t die on a two-hour swim. And we got a little bit of things for you here today. So thank you for coming with you talking.

Lewis: Thank you. Thank you.

Chatman:  Thank you, Michael.

Lewis: Thank you.

Chatman: It’s so great to see you. Thanks for coming. Bye, great to meet you. Hey, thanks everybody. We’ll see you next semester.

Berkeley Haas launches O’Donnell Center for Behavioral Economics to lead the next generation of research

Established with a philanthropic investment of almost $17 million from Robert G. and Sue Douthit O’Donnell, the new center will bring together the best minds from a wide range of fields.

An aerial view of the Haas School of Business campus showing a wide staircase leading up to an arched entry between two buildings.

Berkeley, Calif.—Ever since Nobel laureates George Akerlof and Daniel Kahneman created a 1987 UC Berkeley course that broke the rigid barrier between psychology and economics, the university has led the way in bringing the once-disparate disciplines together into the field of behavioral economics.

More than 35 years later, the Haas School of Business is launching the Robert G. and Sue Douthit O’Donnell Center for Behavioral Economics to advance the field toward its next stage of evolution.

Portrait of a woman with shoulder-length dark blond hair and purple blazer.
Professor Ulrike Malmendier (Photo: Copyright Noah Berger)

“We went from neoclassical economics that considered humans to be perfectly rational, to behavioral economics that brought in social psychology,” says Ulrike Malmendier, the Cora Jane Flood Professor of Finance, who will serve as the center’s faculty director. “Now we want to move the needle further, bringing together the best minds for rigorous research on human behavior from the sciences more broadly—including neuroscience, cognitive science, biology, medicine, epidemiology, and genetics.”

Funded with a philanthropic investment of almost $17 million by Bob O’Donnell, BS 65, MBA 66, and his wife, Sue O’Donnell, the center aims to become the preeminent hub for the maturing fields of behavioral economics and finance, bringing together leading researchers from a wide range of disciplines for collaboration, conferences, and bootcamps, as well as funding promising PhD students and postdoctoral scholars. The center will also host the prestigious Behavioral Economics Annual Meeting (BEAM), co-founded by Malmendier, every three years.

A nexus for cross-disciplinary research

O’Donnell says he was inspired by the pioneering work of Kahneman, Akerlof, Malmendier, and others who gave Berkeley its leading position in behavioral economics. “UC Berkeley is dedicated to integrating business education with other disciplines on campus, which is essential in this area,” he says. “It should have a center devoted to continuing this work.”

The center, says Berkeley Haas Dean Ann Harrison, will create a far-reaching impact across UC Berkeley, a research powerhouse with many areas of strength. “The goal is to cut through barriers that traditionally hinder research across disciplines, such as different ways of presenting data and publishing results, and bring people together in a different way than what’s usually done,” she says. “The O’Donnell Center will be the nexus of a new form of cross-disciplinary collaboration that pushes behavioral economics toward the future.”

Beyond ‘homo economicus’

Traditional economics was based on the assumption that human beings are perfectly rational, profit-maximizing “robots”—sometimes referred to as “homo economicus” or “economic man,” Malmendier says. Behavioral economics brought in insights from psychology and human behavior to explore the predictable foibles in our thinking, such as decision-making biases, fears of losing out, lack of self-control, and overconfidence. A classic example is Kahneman’s pioneering work with Amos Tversky on loss aversion, which showed that people are willing to take greater risks to avoid a loss than to secure a gain.

These ideas have been integrated into economics and finance departments around the world and have deeply influenced public policy and practice. For example, after Nobel Laureate Richard Thaler and Cass Sunstein developed the concept of the “nudge”—interventions that spur people to act in their own self-interest, such as enrolling in a retirement savings plan—hundreds of “nudge units” were established in governmental and private-sector organizations around the world.

Many other Berkeley Haas researchers helped pioneer this intellectual revolution, including finance professor Terrance Odean, BA 90, MS 92, PhD 97, the Rudd Family Foundation Chair, who was convinced by Kahneman to pursue a doctorate in finance rather than psychology and whose work reveals investors’ flawed decision making.

O’Donnell, the center’s founding donor, says he often applied insights from behavioral economics during his career as a portfolio manager for a large mutual fund group. “It represents a further step in the evolution of financial theory comparable to the development of the efficient market hypothesis,” he says. “When combined with existing financial theory, I believe that its insights enhanced results for my clients.”

Yet, during the 17 years he taught an investment class in the Berkeley Haas MBA program, O’Donnell says he sometimes encountered skepticism when he introduced ideas from the field. “Indeed, one student asked, ‘Isn’t all this kind of woo-woo?’”, he says. “Several years later, that student told me how perspectives from behavioral economics had helped her career in finance.”

Experience effects

Now, after more than three decades of foundational work, it’s time to move behavioral economics past its adolescence, Malmendier says. “Behavioral economics made progress by including psychology, but we didn’t include all the other sciences.”

Malmendier, whose groundbreaking work on “experience effects” earned her a Fischer Black Prize in 2013 for the top economist under the age of 40 and a Guggenheim Fellowship in 2017, has focused on complex economic behaviors. She has studied how stressful experiences with recessions, layoffs, inflation, housing bubbles, and political repression make consumer and investor behavior more cautious and risk averse for years afterward, and she has explored how stress can affect our health, careers, education, and other aspects of life in dramatic ways.

To further that work, Malmendier aims to bring a wider range of researchers together and break down silos. For example, collaborating with neuroscientists, neuropsychiatrists, biologists, medical researchers, and epidemiologists who have studied stress and trauma could more precisely demonstrate how past experiences shape our actions today and across generations. Stress impacts the big variables that economists study, such as completing an education, choosing an occupation, and deciding to have a family, she says.

“As we walk through life, our outlook on the world changes, especially if we suffer trauma,” she says. “Neuroscience says our brain gets rewired. There may be a long-term impact of stress on our longevity, on our aging, and on our health.”

Questioning the status quo

Malmendier, who now serves on the German Council of Economic Experts, is passionate about the potential of behavioral economics to help leaders create better solutions to the most complex and urgent problems of our time—from fighting climate change to battling inflation and avoiding financial crises. “If leaders keep in mind people’s emotions, their personal histories, and their psychologies, they can engineer ways to make things more predictable and give people more control over events help them live better lives,” she says. “That is our ultimate goal.”

Photo of a man with light skin, short brown hair, and glasses, wearing a navy blue jacket with white collared shirt.
Professor Stefano DellaVigna

Moving the field forward will also involve rigorous research to reexamine what has come before. For instance, a recent paper by center co-founder Stefano DellaVigna, the Daniel E. Koshland Senior Distinguished Professor of Economics and professor of business, with Elizabeth Linos of Harvard, suggests that leaders should get more realistic about nudge policies—and better at incorporating them into practice. Two government nudge units opened their records to allow the researchers to look at all their interventions. By examining 126 randomized controlled trials of nudge policies involving 23 million people in the United States, the researchers found that nudge interventions are on average effective, increasing the desired outcomes by about 8%. However, the effects are less than those in published academic papers—about one-fifth the size. The authors attribute the difference to publication bias, or the tendency toward publishing only large, surprising results.

“Our study stresses the importance of research transparency,” DellaVigna says. “This transparent access is quite unique and shows a further innovative impact of behavioral economics, which has led to more evidence gathering within governments.”

In a second paper, DellaVigna and Linos, along with Department of Economics doctoral student Woojin Kim, found that even when nudge policies are found to be effective, public agencies implement them only about a quarter of the time, often due to organizational inertia.

In addition to Malmendier and DellaVigna, the center will include a host of affiliated researchers from Berkeley Haas and Berkeley Economics, as well as from across the university. They include Berkeley Haas professors Ricardo Perez-Truglia, Ned Augenblick, Don Moore, and Gautam Rao, PhD 14—who will join Haas in January from Harvard University—as well as Dmitry Taubinsky of Berkeley Economics and others. The founding gift will establish a permanent endowment to support the center and some of its ongoing activities.


Media Contact: Laura Counts, [email protected], 510.205.9570

Japan’s top economic minister visits Berkeley Haas to spur innovation, collaboration

Photo of three people on a stage. The man in the center is speaking.
Minister Nishimura Yasutoshi (center) speaks with Acting Dean Jennifer Chatman (right).

Nishimura Yasutoshi, Japan’s Minister of Economy, Trade and Industry (METI) visited UC Berkeley and the Haas School of Business this week to spread the message that Japan is making significant investments to transform its economy through entrepreneurship and innovation.

While Japan may be best known for its big companies like Toyota and Sony, “They began as startups first of all,” said Minister Nishimura, speaking through an interpreter in a conversation with Haas Acting Dean Jennifer Chatman. “Entrepreneurship is really in the DNA of the Japanese people.” 

Invited to campus by the Clausen Center for International Business and Policy as part of events surrounding the Asia-Pacific Economic Cooperation (APEC) Summit in San Francisco, Minister Nishimura’s visit also expanded the collaboration between UC-Berkeley and the Japan External Trade Organization (JETRO). During the event, Caroline Winnett, Executive Director of the Berkeley SkyDeck accelerator, signed a memorandum of understanding with JETRO to further advance entrepreneurship, innovation, and scholarship.  

Minister Nishimura also toured SkyDeck, which to date has hosted about 60 Japanese startups through its JETRO partnership. 

In addition to the SkyDeck collaboration commemorated at Minister Nishimura’s talk, Berkeley Haas has a long tradition of partnering with Japanese companies and universities to promote innovation and entrepreneurship. In the past year, the Berkeley Haas Entrepreneurship Program has worked with Tohoku University to train top startups from the Sendai region in Lean Launch methodology. Haas has also hosted leading Japanese companies at the Berkeley Innovation Forum to explore building their innovation and entrepreneurial ecosystems.

To achieve its goal of a tenfold increase in the number of startups over the next five years, the Japanese government plans to send 1,000 entrepreneurs to the Bay Area over a five year span, and to invest in university partnerships, noted Haas Continuing Lecturer Jon Metzler, who helped organize the METI visit to Haas.

“The government of Japan is taking a number of measures to stimulate entrepreneurship, increase new venture formation, and nurture entrepreneurs with a more global mindset—including sending promising entrepreneurs to acceleration programs like Berkeley SkyDeck,” Metzler said.

‘Unicorns and decacorns’

METI Minister Yasutoshi Nishimura spoke to the Berkeley community on Japan’s innovation goals.

After an introduction by Associate Professor Matilde Bombardini of the Clausen Center, Minister Nishimura delivered prepared remarks and sat for Q&A with Acting Dean Chatman. He said everyone who has visited Japan in the past few years is surprised by how much it has changed. 

“In terms of macroeconomy, over the past 30 years because of deflation, it has been a challenging time for Japan. But now we are in an era when big changes are about to take place,” Nishimura said. Within the population of about 125 million, many entrepreneurs have been content to find success within the country. But Nishimura is encouraging young entrepreneurs to think big and “go global.”

“We are looking toward the emergence of many unicorns and decacorns,” he said. 

Nishimura also talked about plans to build a next-generation semiconductor fabrication facility in Hokkaido, which will adopt a 2 nm fabrication processa major technological leap compared to current fabs in Japan.

In addition to the Haas’ Clausen Center for International Business and Policy, the event was hosted in partnership with the Berkeley APEC Study Center, the Institute for East Asian Studies, the Center for Japanese Studies, and Berkeley SkyDeck, with support from the Haas Asia Business Club. The Japan Society of Northern California also helped promote the event. 

Left to right: Chris Bush, executive director of the Institute for Business Innovation; Berkeley Haas Lecturer Jon Metzler; METI Minister Yasutoshi Nishimura; Acting Dean Jenny Chatman; and UC Berkeley Executive Education CEO Mike Rielly.


In TEDx talk, professor Juliana Schroeder shares ways to fight loneliness

With approximately 44 million Americans having reported daily feelings of loneliness, U.S. Surgeon General Dr. Vivek Murthy earlier this year declared that we are facing a “loneliness epidemic.”

Juliana Schroeder, the Harold Furst Chair in Management Philosophy and Values Professor and Barbara and Gerson Bakar Faculty Fellow at Berkeley Haas, explored this crisis in a recent TEDxMarin talk, sharing strategies to fight loneliness and live a more connected life. Schroeder is a behavioral scientist who researches the psychological processes behind how people interact and make social inferences about others.

In fact, Schroeder herself once felt plagued by loneliness. She shared that while riding public transit early in her career, she used to feel particularly disconnected from those around her. Technology is only exacerbating our loneliness, she added.

“Avoidance is easier for us than ever,” she said in her talk. “Online avoidance feels convenient, but it carries an inconvenient consequence.”

“Avoidance is easier for us than ever.”

This “inconvenient consequence” extends beyond the emotional impacts of loneliness. In fact, Schroeder noted a meta-analytic review in the journal PLOS Medicine that found sustained loneliness is potentially as harmful to human health as smoking 15 cigarettes a day.

When people refuse to interact with others and instead retreat into their tech devices, Schroeder explained, the cycle is only perpetuated.

“The paradox of loneliness is that people who are lonely don’t want others to think there is something wrong with them,” she explained. “So they further isolate themselves, creating a cycle of loneliness.”

“The paradox of loneliness is that people who are lonely don’t want others to think there is something wrong with them. So they further isolate themselves, creating a cycle of loneliness.”

Strangers on a train

Schroeder, who also holds affiliations with the Social Psychology Department, Cognition Department, and Center for Human-Compatible AI at UC Berkeley, has explored this paradox in her own research, looking at not only the causes behind the loneliness epidemic but also at potential solutions. When completing her doctorate in social psychology at the University of Chicago, for instance, she ran an experiment inspired by her own experiences on the train.

She found that people expected that talking with a stranger on the train would result in the least positive commute experience—but, in reality, it did the exact opposite. Those who engaged with others on the train reported having the most positive commute experience, leading her to beg the question: Why do people choose to avoid each other if they’d be happier connecting?

One of the main reasons, she finds, is that people tend to overestimate the social risk that comes with connecting with others. Citing the rule of social reciprocity, however, Schroeder noted that nearly all participants received a response when engaging with another person on their commute.

Fostering deeper connections

Curing loneliness is about more than just making small talk—it also requires establishing deeper connections with colleagues, friends, and more. In another study published in the journal Psychological Science, Schroeder found that the medium through which communication occurs is crucial to its quality. That is, voice-based communication like in-person and phone conversations—as opposed to text-based communication like texting, emailing, or DMing on social media—changes how words are received and understood, influences word choice, and affects the synchronicity of exchanges.

In fact, research suggests voice conversations enhance brain wave and heart rate synchrony—the neurological and cardiovascular evidence of psychological alignment.

“Combating loneliness means making the deliberate choice to connect when all you want to do is avoid,” Schroeder concluded. “These choices might feel small, but in aggregate, they have the power to change us from feeling lonely to feeling connected.”

Berkeley Haas launches new Climate Solutions Fund 

Aerial view of a massive array of solar panels
An aerial view of Dominion Energy’s Scott Solar farm in Powhatan, Va. (AP Photo/Steve Helber)

The Haas School of Business is launching the first student-led Climate Solutions Fund, the latest addition to its comprehensive curriculum to equip the next generation of business leaders with the financial skills to accelerate the transition to a low-carbon economy.

Beginning in fall 2024, MBA students can enroll in a new course where they serve as investment managers for the $2.37 million fund, learning how to structure financing in complex private markets by co-investing in real-world deals focused on solutions to climate change.

“As the world moves toward a goal of net-zero carbon emissions by 2050, we need financial leaders with the skills to navigate the economic revolution we are facing,” says Professor Adair Morse, co-founder of the Sustainable and Impact Finance Center (SAIF), who conceived of the fund and will lead the course. “This economic revolution will be staggeringly disruptive yet will also be a source of more business opportunities across all parts of the country than we’ve seen in 250 years.”

“As the world moves toward a goal of net-zero carbon emissions by 2050, we need financial leaders with the skills to navigate the economic revolution we are facing.” —Professor Adair Morse

The new fund was made possible by a lead gift from Allan Holt, MBA 76, along with generous founding donations from Larry Johnson, BS 72, Charlie Michaels, BS 78, and his wife Doris, Scott Pinkus, and Professor Laura D. Tyson, former Haas dean and co-founder of SAIF.

“I am thrilled to help Haas take the lead in training leaders in the emerging area of climate finance,” says Holt, a Senior Partner and Managing Director of The Carlyle Group. “Decarbonizing our economy is the critical issue of our time, and I am committed to supporting future leaders who can spur this transition.”

“Decarbonizing our economy is the critical issue of our time, and I am committed to supporting future leaders who can spur this transition.” —Allan Holt, MBA 76

The multi-asset class private Climate Solutions Fund augments Haas’ unique curriculum under SAIF, which teaches investment management with hands-on experiential learning. It rounds out the public markets-focused Sustainable Investment Fund—the first and the largest student-led sustainable investing fund within a leading business school—and the Haas Impact Fund, a seed/startup capital offering.

A new area of finance

The Climate Solutions Fund curriculum will teach students new designs and uses of finance not traditionally taught in mainstream finance courses, where there are dire needs for leadership, according to  Morse, who saw the need for this financial expertise while serving as deputy assistant secretary of Capital Access in the U.S. Department of the Treasury from 2021-23.

Financing the climate transition requires a diverse and technical tool kit: An estimated $4 trillion to $5 trillion per year will be needed to reshape global energy, transportation, food, and waste infrastructure, and to help companies reinvent supply chains and integrate new technologies, Morse says. 

This level of reinvestment will require every finance tool available, including designing financial structures to mobilize government programs and work with community and industry partners,” she says. “Our goal is to expand how we teach students to provide the leadership and expertise that corporations, financial entities, startups, governments, and philanthropies will need to navigate this transition.”

This level of reinvestment will require every finance tool available, including designing financial structures to mobilize government programs and work with community and industry partners.” —Professor Adair Morse

The fund, and the associated MBA course, are the first at a major business school to focus on complex financing strategies within private markets, including growth equity and debt equity; public-private partnerships with federal and state programs; risk mitigation; identifying the underlying technologies to fuel the low-carbon transition; and envisioning new financial products.   

Students enrolled in the Climate Solutions Fund course will assess investment opportunities in U.S.–based for-profit companies, working with outside investment partners to structure deals. Following a pitch competition, student managers will select one finalist to co-invest $100,000 to $300,000 annually. The fund is intended to generate positive returns over time so that future generations of students can build off the capital.

Stock photo of a biogas plant and farm (Adobe Stock)

Comprehensive curriculum

In addition to the “fund-as-curriculum” courses, SAIF also offers other applied innovation courses such as the Impact and Climate Investing Practicum, where faculty guide small teams of MBA students who are paired with impact investing firms to to gain hands-on experience with impact investing strategy, mapping, and measurement projects.

The courses count toward the Michael’s Graduate Certificate in Sustainable Business. Open to both full-time and evening and weekend MBA students, the certificate requires 9 units of required coursework. Students can create a pathway that’s focused on either bringing a sustainability lens to a mainstream business function or building expertise into a specific industry such as renewable energy or green infrastructure.

In addition to Morse, SAIF is led by Professor Panos Patatoukas, The L.H. Penney Chair in Accounting, and Tyson.

Five major areas of sustainability

The new Climate Solutions Fund is part of Haas’ larger effort to ensure that all students are educated in the fundamentals of sustainability. Haas launched the first student-managed SRI fund in the early 2000s and is now the only top business school to work across five major sustainable business areas: energy, sustainable agriculture and food, real estate and urban economics, corporate accountability, and sustainable finance and accounting.

The school has combined research on energy conservation and storage, building efficiency, renewable energy sources, and sustainable food with efforts to include climate and equity into the core business curriculum across all programs. All told, Haas offers more than 25 courses with a focus on sustainability.

For students planning careers in managing sustainability challenges in organizations, Haas is also planning to launch a new joint master’s program in 2024 with the Rausser College of Natural Resources to offer an MBA/MS in Climate Solutions. 


Lifetime achievement award for Professor Emeritus Pablo Spiller

A man dressed in business attire hands an award certificate to a man wearing a blue sports jacket.
Professor Emeritus Pablo Spiller (right) accepted the 2023 Elinor Ostrom Lifetime Award in August at the SIOE’s annual conference in Frankfurt, Germany.

Professor Emeritus Pablo T. Spiller has received the 2023 Elinor Ostrom Lifetime Achievement Award by the Society for Institutional and Organization Economics (SIOE).

The award is given biennially to a researcher who has made “sustained significant academic contributions to institutional and organizational economics.” It is named for Indiana University political scientist Elinor Ostrom, who shared the 2009 Nobel Prize in Economic Sciences with Berkeley Haas Professor Oliver Williamson.

A portrait of a man wearing a collared shirt and purple tie.
Professor Emeritus Pablo Spiller

Spiller is the Jeffrey A. Jacobs Distinguished Professor Emeritus of Business & Technology at the Haas School, as well as a UC Berkeley professor of graduate studies.

Spiller’s research lies at the intersection of economics, politics, and the law, and spans political economy, industrial organization, the economics of regulation and antitrust, and regulatory issues in developing countries. One research stream analyzed the hazards inherent to public contracting, and how it differs from private contracting. Spiller applied the approach to such areas as utility regulation, the organization of bureaucracies, and the inner workings of public companies.

In addition to his academic work, Spiller has consulted for the World Bank, the InterAmerican Bank, the UNDP and multiple governments and private companies throughout the world on the design and implementation of appropriate regulatory policies, contract design and implementation. He has also testified in numerous international arbitrations involving contract, regulatory and investment disputes. He is the former President of the International Society for New Institutional Economics (now SIOE).

Spiller served as the Editor-in-Chief and Associate Editor of the Journal of Law, Economics, and Organization for 19 years, and held multiple Editorial appointments at a variety of academic journals. On special leave from Berkeley, he served as a Special Advisor to the Bureau of Economics of the US Federal Trade Commission.

Berkeley Haas Undergraduate Program again ranks #2 in U.S. News

New undergraduate students walk through the Haas courtyard during orientation 2023.

The Haas Undergraduate Program has been ranked #2 in U.S. News & World Report’s 2024 Best Undergraduate Business Programs.

It’s the second year in a row that Haas has tied with MIT for the #2 spot. Both schools had peer assessment scores of 4.6 on a scale of 1 to 5. Wharton held the #1 spot with a score of 4.7.

The business school ranking is based entirely on a peer assessment survey of deans and senior faculty members at peer institutions. They are invited to rate peer programs with which they are familiar, based on each program’s scholarship record, curriculum, and quality of faculty and graduates. Read more about the ranking methodology.

In U.S. News’ 2024 Best Colleges, UC Berkeley again ranked as the #1 public university in the country, tied with UCLA.

Putting her story in the Haas story: 125th anniversary celebration honors founding donor Cora J. Flood

Exactly 125 years after Cora Jane Flood announced the gift that launched UC Berkeley’s College of Commerce, Haas students and staff packed the school’s sunny courtyard to celebrate this milestone.

Haas is not only the second-oldest business school in the country and the first at a public university. “Haas is the only leading business school to be founded by a woman, Cora Jane Flood, who was known as Jennie,” said Professor and Acting Dean Don Moore. “Haas is also the first top business school to be led by two women deans—Laura Tyson and Ann Harrison.”

Dean Ann Harrison unveiled a new plaque honoring Flood. “Now, students, staff, faculty, alumni, and visitors can learn her name and be inspired by her far-sighted philanthropy,” said Harrison, who is on sabbatical this fall but returned for the event.

Flood, the daughter of silver baron James Clair Flood, gave a gift of securities and real estate with an estimated value of $463,133.39, constituting the largest private gift received by the then-30-year-old university. According to the book “Business at Berkeley: The History of the Haas School of Business” by Sandra Epstein, “By 2013, the gift’s value had grown to over $25 million, comprising one of the largest endowments on the Berkeley campus.”

The courtyard event was part of an ongoing celebration this fall of Haas’s 125th anniversary. See photo highlights and check out the video and transcript below, and read more about how Haas has been reimagining business for more than a century in a special issue of Berkeley Haas magazine.

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Acting Dean Don Moore addresses the crowd at the 125th anniversary celebration.
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Hundreds of students, staff, faculty, and alumni turned out to celebrate.
A plaque honoring founding donor Cora J. Flood was unveiled at the event.
Erika Walker, Senior Assistant Dean for Instruction, spoke at the event.
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Ben Hermalin, UC Berkeley's executive vice chancellor and provost, was also a guest speaker.
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Dean Ann Harrison, who is on sabbatical, joined the festivities at Haas.
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Former Haas Dean Rich Lyons, Associate Vice Chancellor for Innovation & Entrepreneurship, serenades the crowd, jamming to Bare Necessities.
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Full event event video:


Erika Walker, Senior Assistant Dean for Instruction

Good afternoon. I am Erika Walker, Senior Assistant Dean for Instruction at Berkeley Haas.

As we gather for today’s ceremony, we want to acknowledge that UC Berkeley sits on the territory of xučyun, the ancestral and unceded land of the Chochenyo speaking Ohlone people, the successors of the sovereign Verona Band of Alameda County. This land was and continues to be of great importance to the Muwekma Ohlone Tribe and other familial descendants of the Verona Band.

We recognize that every member of the Berkeley community has benefitted, and continues to benefit, from the use and occupation of this land since the institution’s founding in 1868. Consistent with our values of community, inclusion and diversity, we have a responsibility to acknowledge and make visible the university’s relationship to Native peoples. As members of the Berkeley community, it is vitally important that we not only recognize the history of the land on which we stand, but also, we recognize that the Muwekma Ohlone people are alive and flourishing members of the Berkeley and broader Bay Area communities today.

I would now like to welcome Professor and Acting Dean Don Moore to the podium.

Professor Don Moore, Acting Dean and Associate Dean for Academic Affairs 

Thank you, Erika. And welcome, everyone! Thank you so much for joining us this afternoon. What an honor it is to serve as the acting dean of this exceptional business school while Dean Harrison is on sabbatical. I hope you are all having a great start to the semester so far.

This year, we look back on 125 years of reimagining business at Haas, all the way to 1898, the year of our founding as the second-oldest business school in the United States.

In 1898, we might have been listening to “The Entertainer” on our gramophones, watching the short film The Astronomer’s Dream on the kinetoscope, or trying on a new bowler hat. California had recently transitioned from Mexico to the United States. Berkeley had a population of 5,000. The bicycling craze was giving women a new avenue of independence. That year, the Golden Bears beat Stanford at the Big Game, 22-0!!

This was also a pivotal time for business, which was coming into its own as a profession on par with law and medicine. Smart management was sorely needed in an era of wild economic growth, robber barons and corruption, fortunes made and lost in immense new enterprises. These new businesses needed to make sense of thousands of employees, strategic mergers, and ballooning divisions.

This was also a pivotal time for business, which was coming into its own as a profession on par with law and medicine. Smart management was sorely needed in an era of wild economic growth, robber barons and corruption, fortunes made and lost in immense new enterprises. These new businesses needed to make sense of thousands of employees, strategic mergers, and ballooning divisions. —Don Moore

Where better than a great university in the pioneering West to order and transform the way we worked? Good sense was not enough; mass scale was a necessity; and only the skilled and sophisticated would thrive. Learning the systems and theories of professional management was a logical—and necessary—next step. A new institution would need to draw scholars from the rest of the world to Berkeley, and produce brilliant minds of its own.

And so it did. The College of Commerce, which we now know as Haas, was founded with just three students. Now we have over 2,500 students in six programs, more than 300 ladder and professional faculty members, and more than 43,000 alumni in 81 countries around the world.

We are also the first business school founded at a public university. Haas is the only leading business school to be founded by a woman, Cora Jane Flood, who was known as Jennie. Haas is the first top business school to be led by two women deans—Laura Tyson and Ann Harrison, respectively.

And we are the first school built entirely with private donations on the UC Berkeley campus. We are incredibly grateful to all of the donors who have supported our school.

Of course, the Berkeley Haas legacy includes more than a century of stellar researchers and teachers, including two Nobel laureates. We are fortunate to be able to attract exceptional staff. And we are more than the sum of our parts. My colleague and fellow acting dean Jenny Chatman will say more about what really makes us exceptional. 

Professor Jennifer Chatman, Acting Dean and Associate Dean for Academic Affairs  

Thank you so much, Don. I am honored to be serving the school with you this fall.

As a scholar of culture, I want to note that Berkeley Haas stands out in yet another way: in being the preeminent mission-driven business school, as Poets & Quants has described us.

The Haas School’s values stretch back a long way. The man for whom our school is named, Walter A. Haas, Sr., graduated from the College of Commerce in 1910. He held forward-looking views on social welfare and public affairs that were influenced by the school’s first woman instructor, Jessica Peixotto. That influence led him to grow Levi Strauss & Co. into one of the country’s largest socially responsible businesses.

All of these priorities grew into our four Defining Leadership Principles, which I know you know well: Question the Status Quo; Confidence Without Attitude; Students Always; and Beyond Yourself. To put these principles into action in our three core areas: innovation and entrepreneurship, sustainability, and inclusion.

Of course, they are all inextricably linked. Berkeley Haas boasts a world-class team for diversity, inclusion, justice, and belonging. The school has built and continues to build remarkable access, while simultaneously equipping all of us to be more inclusive leaders. Sustainability and entrepreneurship are always top of mind at Haas. And thanks to our location in Berkeley—the epicenter of innovation—we have been and continue to be the heart of what’s next.

Finally, I am so pleased that several members of the chancellor’s cabinet are joining us today. Berkeley Haas’ deep ties with Cal are precious, and we don’t take them for granted.

Executive Vice Chancellor and Provost Ben Hermalin has a special connection to Berkeley. He has held a significant number of roles at Haas: as professor, associate dean, interim dean, and winner of multiple teaching awards. Ben, thank you for being with us today.

Ben Hermalin, Executive Vice Chancellor and Provost, UC Berkeley:

Thank you, Jenny!

It is true that Berkeley Haas is dear to my heart. But it is also a treasured and essential star in the Cal constellation. This is a vibrant, visionary school that provides students, faculty, staff, and alumni much of the meaning that I believe gives us purpose as individuals and as institutions. One way the school does that is by attracting award-winning scholars, who illuminate their classrooms and advance the world’s knowledge. Berkeley Haas strives to teach and shape business in ways that are valuable to a broad spectrum of people, in profound and material ways. We try to go beyond in deed and not just in word. We always have a lot more work to do—to be as inclusive and just; bold and confident; smart and ethical as we can. That is the best way for us all to stay true to those who built this institution and to our counterparts in the future. Congratulations on this momentous anniversary!

Don Moore:

Thank you, Ben.

This occasion is so special to the Berkeley Haas community that Dean Ann Harrison has returned today (from her sabbatical this fall) to share it with us. Ann, please join me onstage.

Dean Ann Harrison:

Thank you so much, Don! What a beautiful day, as it so often is in Berkeley. I am thrilled to be here with you all. I do feel as though I am reaching across more than a century and saying thank you to Cora Jane “Jennie” Flood. I am grateful for her confidence, generosity, and foresight, and believe she would have found today to be a powerful testament to her intention. We are so fortunate that there are Flood family members here with us today celebrating this occasion.

In her declaration to the Regents of the University of California on September 13th, 1898, Jennie Flood wrote of her bestowal that it “shall be devoted to some branch of commercial education.” The bold idea to create a College of Commerce had been proposed by Berkeley graduate and entrepreneur Arthur Rodgers in 1883. Jennie Flood turned Rodgers’s vision into reality.

125 years of groundbreaking education is a remarkable achievement for any business school, especially given the immense changes the world has undergone. Having reimagined business, we are well positioned to lead in a world of change. We look back with pride, but we move forward to make an impact for future generations. Keeping our eye on innovation and entrepreneurship, sustainability, and inclusion is more important than ever.

It is high time that we make Jennie Flood a permanent part of our campus. I am honored to unveil this plaque, which commemorates our founder and allows us to put a name—and a face—to the origins of Berkeley Haas. Now, students, staff, faculty, alumni, and visitors can learn her name and be inspired by her far-sighted philanthropy. Her father, James Clair Flood, was the son of immigrants who took an eighth-grade education and an entrepreneurial spirit to become one of the “Silver Kings” of Gilded Age San Francisco and a UC Regent. Jennie often accompanied him to his business meetings, and I would go so far as to say she was an informal student of business herself!

And now, we’ll reveal our new plaque in her honor.

What a beautiful addition to our campus and to our continuing story. Berkeley Haas has staying power. We’re not going anywhere—we’re just getting better.

Please come over during the reception and check it out!

Don Moore:

Thank you so much, Ann. To tie together the whole web of Haas-tory from our esteemed founder to our current dean, I am happy to report that former dean Rich Lyons is here with us to celebrate. He is such an important part of our legacy, both philosophically and musically. To that end, he has brought his guitar to send us out snapping our fingers. Take it away, Rich!

Rich Lyons, Associate Vice Chancellor for Innovation and Entrepreneurship

(Lyons performs a special Haas-themed version of “The Bare Necessities,” singing and playing acoustic guitar.)

Don Moore:

A perfect note to end on. Thank you so much to everyone for joining us today. Please enjoy some refreshments and bask in this beautiful day and community. Here’s to the world-changing 125 years behind us, and to all the triumphs ahead.

Go Bears!

Professor Yaniv Konchitchki: Is a soft landing still possible?

In this live interview on Wharton Business Daily, Associate Professor Yaniv Konchitchki discusses whether a soft landing is still possible and provides insights about the current state of the capital markets and the macroeconomy. Konchitchki argues, based on his research, that the Federal Reserve has made systematic and predictable errors, waiting too long to raise interest rates and letting inflation get out of control. He comments on whether further interest rates hikes are necessary, whether the Fed’s 2% inflation target is the right one, and discusses whether inflation can get under control without further hurting consumers, businesses, households, and the economy.

Konchitchki also refers to his new working paper, “Predictable Errors in Monetary Policy Communications and Decisions,” coauthored with Berkeley Haas professors Don Moore and Biwen Zhang.

Listen to the full interview:

We need a tough global AI treaty—before it’s too late

U.S. President Joe Biden stands at a podium at the White House speaking. To his right are CEOs of seven leading AI companies.
U.S. President Joe Biden delivers remarks on on Artificial Intelligence next to CEOs of seven leading AI companies at the White House in Washington on July 21, 2023. Photo by Yuri Gripas/Abaca/Sipa USA(Sipa via AP Images)

On July 21, seven artificial intelligence (AI) tech companies signed a set of eight voluntary commitmentsfocused on “ensuring safe, secure and trustworthy AI.” The text of the document hit on most of the important topics of concern in the field, but it seems the tech companies walked away with more than they deserved. Company leaders were granted a photo op and media interviews from the White House lawn. What they provided in return were vague, voluntary commitments with no enforcement mechanism.

Why so skeptical? All of the big companies included have in the past paid fines in the billions of dollars (AmazonGoogleMetaMicrosoft) to regulators in the United States and the European Union in connection with violations of privacy and antitrust laws. These infractions were arguably not accidental. Companies take calculated risks that represent the cost of doing business in a highly competitive industry, often characterized by “races to the bottom” to gain control of markets such as search, shopping, social media and advertising.

And yet, enforcement works: I know first-hand, having worked on Meta’s Responsible AI team until November 2022, that tech companies are moved to do the right thing by firm regulation backed up by the threat of massive fines and reputational damage. When there is little or no regulation in place, teams working on topics such as responsible AI — one example being Twitter’s Machine Learning, Ethics, and Transparency team — can be abruptly downsized or eliminated.

It’s to be hoped that the new commitments are the “bridge to regulation” that White House staff make them out to be. An executive order on AI is in the works. However, such orders can easily be reversed by subsequent administrations. Perhaps the bipartisan popularity of AI regulation will serve as a bulwark against some reversals, but the power of tech industry lobbying is not to be underestimated — in fact, efforts are already under way to influence AI legislation and shift public opinion.

Another important path to explore would be for Joe Biden’s administration to work with Congress to pass strong legislation on AI. This approach has the potential to be much more durable and sweeping than an executive order. But gridlock being what it is, and given Congress’s protracted failure to regulate social media, relying on federal legislation seems a tall order.

That is why the ultimate destination must be a binding, international treaty that creates a new intergovernmental body to govern AI globally. As is the case with controlling nuclear weapons and tackling climate change, a patchwork of regulation will leave certain AI harms dangerously unregulated. Powerful tools could conceivably fall into the hands of bad actors who could leverage them to produce disinformation campaignscreate bioweapons or deploy fleets of autonomous killer robots.

The good news is that it appears the Biden administration is already working in this general direction. An announcement that accompanied the new AI commitments mentions past meetings with 20 countries, as well as plans to participate in and support processes under way via the United Nations, the Group of Seven and the Global Partnership on AI.

The European Union’s AI Act, expected to pass before the end of 2023, may also serve as an effective model for global or semi-global regulations, though sadly it may not go into effect until 2025 or later. And even if the US Congress cannot move as quickly as the White House would like, President Joe Biden could parallel track domestic and international legislative work by supporting efforts such as the Council of Europe’s emerging draft AI Treaty (as long as it applies to private companies, not just government AI use) and the Center for the Advancement of Trustworthy AI’s campaign to help nations around the world put AI laws in place. China has made fast progress on AI regulation as well, and though there are some provisions in their domestic laws that would not be compatible with more democratic perspectives from countries like the European Union and the United States, there is still great value in engaging with China as a potential partner on numerous aspects of AI policy.

The Biden administration should lean into this global effort in a major way, as time is of the essence, with new developments in the AI field proceeding at a dizzying pace.

In tandem, the White House could push for more aggressive enforcement of existing laws that prohibit discrimination, whether at the hands of human beings or AI systems. In 2016, the Obama White House released a thoughtful report titled Big Data: A Report on Algorithmic Systems, Opportunity, and Civil RightsLegal scholars argue that civil rights law can be used as a framework to launch broad campaigns against AI bias, a strategy that has yielded results in anti-discrimination lawsuits against social media companies like Meta. State and local laws (see, for example, New York City’s AI hiring law) can also make a difference, by forcing companies to come into compliance.

By working from local to global, the White House has a unique opportunity to advance the cause of enforceable, international AI regulation. I hope that my skepticism is unwarranted and that all seven companies that signed commitments last week will honour the full spirit of those commitments. In the meantime, it’s crucial that regulation of these technologies, in state, domestic and international arenas, proceeds rapidly, so that this transformational technology can truly deliver for humanity.

David Evan Harris is a member of the professional faculty at the Haas School of Business and a chancellor’s public scholar at UC Berkeley. This article was commissioned by the Centre for International Governance Innovation (CIGI),  an independent, non-partisan think tank. It originally appeared on CIGI’s blog on August 3, 2023.

Prof. Jennifer Chatman wins lifetime achievement award for culture research that ‘changed the field’

Professor Jennifer Chatman has won a lifetime achievement award for “research on culture that has changed the field of organizational behavior,” according to an announcement from the Academy of Management’s Organizational Behavior Division.

Professor Jennifer Chatman

Chatman, the Paul J. Cortese Distinguished Professor of Management and Associate Dean for Academic Affairs at Berkeley Haas, will receive the award at the OB@AOM conference in Boston next month.

Chatman has “pioneered new theoretical and conceptual approaches to the topic and continues to do so. She also has been a strong mentor to many doctoral students over the years. Finally, beyond her own work and the work of her students, she has contributed to the field as an editor…and editorial board member at almost all of our top journals,” according to the announcement.

In the early 1990s, Chatman co-created the field’s leading quantitative research tool, the Organizational Culture Profile, with Charles O’Reilly, MBA 71, PhD 75, and Dave Caldwell. It illustrated how organizational culture can be quantified, has defined the agenda for the scientific study of culture for decades, and remains the most robust and reliable measure of organizational culture to date.

In nominating Chatman, colleagues noted that she “owns the topic” of culture research and is a “household name” in the field. They also noted that her achievements span beyond being purely scholarly: “For more than 30 years, Jenny has been one of those rare scholars who are triple threats. They are able to be world class scholars over time even as they are leaders in our profession and their host institution,” describing her as “an icon in the field of organizational behavior, as a scholar, as an instructor, and as a mentor. Her career stretches long, well over 30 years, and during that time her work has been nothing short of pathbreaking” and the “ultimate exemplar of a completely involved modern OB researcher, educator, and contributor to the larger world of work and working.”

Chatman will continue to expand her leadership when she steps into the role of interim dean this fall, filling from October-December while Dean Ann Harrison is on sabbatical.

Professor David Vogel honored for lifetime achievement in research on government regulation

Professor Emeritus David Vogel, known internationally for his work on environmental policy and government regulation, has received a lifetime achievement award from the European Consortium for Political Research (ECPR) Standing Group of Regulatory Governance.

The award is given biennially to a scholar who has made a seminal contribution to the development of the field of regulatory studies. 

Prof. Emeritus David Vogel “As an American, it’s a great honor to have my work on regulation, much of which has focused on Europe, be recognized by an association of European scholars,” said Vogel.

Vogel, who holds the Soloman P. Lee Chair Emeritus in Business Ethics, has focused his career on subjects ranging from regulating health, safety, and environmental risks in Europe and the United States to global challenges in responsible business. He has examined the differences between environmental policy in the United States compared to that of the European Union. In his book, “The Politics of Precaution: Regulating, Health, Safety and Environmental Risks in Europe and the United States” (Princeton University Press, 2012), he decribed how the U.S. and the E.U. “flip-flopped their position in risk regulation: Whereas before the 1990s the US had often the stricter standards, nowadays EU standards are stricter in many instances,” said Professor Eva Ruffing of Germany’s Osnabrück University, in a speech presenting the award. 

Vogel is the author of eight other books, including “California Greenin’: How the Golden State Became an Environmental Leader” (Princeton University Press, 2018). Other books include: ; “Global Challenges in Responsible Business” (Cambridge University Press, 2010); and “The Market for Virtue: The Potential and Limits of Corporate Social Responsibility” (Brookings, 2005).

Vogel has taught both Ethics & Responsibility in Business at Haas and Public and Private Global Business Regulation at UC Berkeley. Since 1982, he has served as editor of Berkeley Haas’ management journal, The California Management Review. He has taught classes and lectured on environment management in the U.S., Europe and Asia.

‘Empathy and curiosity:’ How queen jaks is helping Haas make teaching more inclusive

Dr. queen jaks listens during a consultation with a faculty member. (Photo: Brittany Hosea-Small)


When Dr. queen jaks walks into a Berkeley Haas classroom and sits in the back scribbling notes, students wonder what’s going on.

“They think the professor is in trouble and I’m there to get the dirt,” says queen, who writes her name with lowercase letters.

But as the school’s first diversity instructional support consultant, queen is not an enforcer. She’s there as an invited guest of faculty members who want help in making their teaching more inclusive.

“It’s so important to make it clear that I’m not there to tell people they’re doing something wrong. I’m not there to hear both sides,” she says. “I’m there because the instructor wants support.”

Unique role

Over the past year, queen has been helping Haas faculty navigate the minefield of changing mores and heightened awareness around a range of topics often referred to as diversity, equity, inclusion, justice, and belonging (DEIJB). Her role is unique: Rather being called in to mediate when things heat up, she coaches instructors individually—by observing classes, offering suggestions on course content, or consulting on issues that come up in class. She also teaches best practices through brief workshops and exercises.

Holding both an MBA and a PhD in organizational behavior, queen is fluent in the language of academia, while also drawing on her own experiences of feeling like an outsider who broke into that world as a first-generation student from an impoverished community. She grew up in San Diego and earned a BS in business administration from UC Riverside, going on for her MBA from the University of Redlands and her doctorate from Case Western Reserve University.

She approaches the job with empathy, curiosity, and a natural sense of humor.

“We’re all learning, we’re all going to make mistakes, and that’s okay,” says queen, whose own research focuses on the contributions of marginalized communities. “Society is evolving, and people want change really badly, so everything that comes out of your mouth in the classroom is going to be scrutinized. I’m here to say ‘I feel you. Now let’s turn it around and see how that might be perceived.’”

A woman with long dark hair wearing a white blouse sits in an office chair talking to a man wearing black t-shirt and yellow pants
DEI Instructional support consultant queen chats with Professor Steve Tadelis in his office. (Photo: Brittany Hosea-Small)

Haas Chief DEI Officer Élida Bautista dreamed up the new role in response to growing demand from students for more diversity in course content and on the faculty. In addition to the work Haas is doing to hire more diverse faculty members and an effort led by the Center for Equity, Gender and Leadership to compile a library of business cases featuring diverse protagonists, Bautista wanted to find a way to directly support current faculty. Dean Ann Harrison greenlighted the pilot position.

“When I looked around for consultants and talked to my counterparts at other business schools and universities, no one was doing this—so we didn’t really have a model,” Bautista says. As a clinical psychologist, she designed the role so that all services would be confidential and voluntary.

“Anytime you force people to do something, there’s an inherent resistance and that decreases the efficacy,” she said. “Some people think that when you make something voluntary, you end up preaching to the choir. But even the choir needs tuning: People who are bought into these ideas still need skills to carry them out, and they’ll end up bringing others along.”

Sensitive content

That’s what has happened. Associate Professor Juliana Schroeder—who championed the new role along with associate deans Jennifer Chatman and Don Moore and served on the hiring committee—offered to be a guinea pig for queen to observe her leadership class.

Schroeder is a social psychologist who has thought carefully about diversity and psychological safety in her teaching and materials. Still, on the day of the observation, when she was referencing the 1986 Challenger Space Shuttle explosion to shed light on decision-making pitfalls for a case study about car racing, a student had a “PTSD-like” incident in her classroom.

“He was an Army veteran, and this was directly relevant to his experience,” Schroeder says. “I was so glad queen was there that day, and I was blown away by how great her feedback was. It really illustrated what a benefit it was to have someone well-trained in these topics right there in my classroom.”

After the session, queen gave Schroeder a detailed report with suggestions on adjusting her script and offering both a written and verbal alert for sensitive topics. It also included a list of things she was doing well, and some practices to add—such as repeating back answers that were lower in volume, acknowledging students who were waiting to speak, and using contrasting colors on slides—as well as including photos in her slides that would show diversity beyond race and gender.

Word of mouth

Schroeder thought it was so helpful she asked to share it with other faculty members, and soon queen had a full calendar.

“Every single person I’ve worked with has been so receptive,” queen says. “I’ve spent a lot of time at business schools, and it’s been jaw-dropping how much Haas has embraced this.”

Associate Professor Mathijs De Vaan invited her to sit in on a session focused on DEIJB in his MBA course Leading People. De Vaan, who grew up in The Netherlands, is mindful that his class includes international students who may be new to American culture, as well as students with backgrounds that have been marginalized in the U.S.

“It’s a challenge. There’s always a group of students who are very knowledgeable and very vocal, and others who know these are sensitive subjects and are afraid to speak at all,” says De Vaan. “I wanted students to be on the same page in understanding the scope of the problem that racism and discrimination represent in the U.S., so I gave them a number of examples of where companies fell short.”

That’s important, queen told him, but it can also be stressful for some students. “For minority students in the room, it might reinforce the idea that their group is marginalized,” he says. To address this, in the next iteration of the class he focused less on examples of problematic situations, and more on possible solutions to societal challenges.

Phasing out the ‘cold call’

A man sits in an office chair talking with a woman who has her back to the camera and is typing on a computer.
Professor Steve Tadelis chats with queen about summer plans. (Photo: Brittany Hosea-Small)

As an instructor in the Israeli Air Force almost 40 years ago, Professor Steve Tadelis says he learned how to teach through feedback from required classroom observations. But the DEI workshops he had taken hadn’t helped him with the specific challenges he faces as an instructor. “I was very open to this,” he says.

After working with queen, Tadelis stood up at the fall faculty meeting to give her an enthusiastic endorsement and encourage others to seek her out. He says he appreciated that she gave him straightforward ways to improve his teaching, including rethinking how he was calling on students.

“I do relatively little of the classic business school ‘cold calling,’ because of the artificial aspect of it. It’s rare in the workplace that a senior leader would suddenly turn to someone and say, ‘What do you think we should do about this?’ They would want more preparation,” Tadelis says.

But after consulting with queen, he realized he could give people even more choice in how they participate without lowering his requirements. “My goal is to give each student a set of tools that they can use as decisionmaker, but I’m not there to change their personalities,” he says.

Debate and experimentation

Tadelis, an economist, still worries about how to create a safe classroom space without shutting down honest debate, and how to let people have moments of discomfort in a respectful way.

“How do we create language that is precise, knowing that some words are clearly off limits but not everyone is going to love every word?”, he says. “There are so many historical wrongs that need to be acknowledged and addressed. But it would be nice if there was less combativeness and more debate, exploration, and experimentation.”

That’s one of the reasons queen’s approach has been so effective. She believes that instructors need to pay attention to students’ needs as individuals beyond their grades, and that many practices need updating. At the same time, she believes in collaboration—and good intentions.

“How we define and integrate DEI is constantly changing, which means that no one—myself included—has all the answers,” queen says. “We just all have to keep giving each other feedback and grace, looking at what we can do better next time.”

As a responsible AI researcher, I’m terrified about what could happen next.

A robotic hand is holding the world
Image credit: iStock

This article first appeared in The Guardian

A researcher was granted access earlier this year by Facebook’s parent company, Meta, to incredibly potent artificial intelligence software – and leaked it to the world. As a former researcher on Meta’s civic integrity and responsible AI teams, I am terrified by what could happen next.

Though Meta was violated by the leak, it came out as the winner: researchers and independent coders are now racing to improve on or build on the back of LLaMA (Large Language Model Meta AI – Meta’s branded version of a large language model or LLM, the type of software underlying ChatGPT), with many sharing their work openly with the world.

This could position Meta as owner of the centerpiece of the dominant AI platform, much in the same way that Google controls the open-source Android operating system that is built on and adapted by device manufacturers globally. If Meta were to secure this central position in the AI ecosystem, it would have leverage to shape the direction of AI at a fundamental level, controlling both the experiences of individual users and setting limits on what other companies could and couldn’t do. In the same way that Google reaps billions from Android advertising, app sales and transactions, this could set up Meta for a highly profitable period in the AI space, the exact structure of which is still to emerge.

The company did apparently issue takedown notices to get the leaked code offline, as it was supposed to be only accessible for research use, but following the leak, the company’s chief AI scientist, Yann LeCun, said: “The platform that will win will be the open one,” suggesting the company may just run with the open-source model as a competitive strategy.

AI without safety systems

Although Google’s Bard and OpenAI’s ChatGPT are free to use, they are not open source. Bard and ChatGPT rely on teams of engineers, content moderators and threat analysts working to prevent their platforms being used for harm – in their current iterations, they (hopefully) won’t help you build a bomb, plan a terrorist attack, or make fake content designed to disrupt an election. These people and the systems they build and maintain keep ChatGPT and Bard aligned with specific human values.

Meta’s semi-open source LLaMA and its descendent large language models (LLMs), however, can be run by anyone with sufficient computer hardware to support them – the latest offspring can be used on commercially available laptops. This gives anyone – from unscrupulous political consultancies to Vladimir Putin’s well-resourced GRU intelligence agency – freedom to run the AI without any safety systems in place.

“Coordinated inauthentic behavior”

From 2018 to 2020 I worked on the Facebook civic integrity team. I dedicated years of my life to fighting online interference in democracy from many sources. My colleagues and I played lengthy games of whack-a-mole with dictators around the world who used “coordinated inauthentic behaviour”, hiring teams of people to manually create fake accounts to promote their regimes, surveil and harass their enemies, foment unrest and even promote genocide.

I would guess that Putin’s team is already in the market for some great AI tools to disrupt the US 2024 presidential election (and probably those in other countries, too). I can think of few better additions to his arsenal than emerging freely available LLMs such as LLaMA, and the software stack being built up around them. It could be used to make fake content more convincing (much of the Russian content deployed in 2016 had grammatical or stylistic deficits) or to produce much more of it, or it could even be repurposed as a “classifier” that scans social media platforms for particularly incendiary content from real Americans to amplify with fake comments and reactions. It could also write convincing scripts for deepfakes that synthesize video of political candidates saying things they never said.

The irony of this all is that Meta’s platforms (Facebook, Instagram and WhatsApp) will be among the biggest battlegrounds on which to deploy these “influence operations”. Sadly, the civic integrity team that I worked on was shut down in 2020, and after multiple rounds of redundancies, I fear that the company’s ability to fight these operations has been hobbled.

Chaos era of social media

Even more worrisome, however, is that we have now entered the “chaos era” of social media, and the proliferation of new and growing platforms, each with separate and much smaller “integrity” or “trust and safety” teams, may be even less well positioned than Meta to detect and stop influence operations, especially in the time-sensitive final days and hours of elections, when speed is most critical.

But my concerns don’t stop with the erosion of democracy. After working on the civic integrity team at Facebook, I went on to manage research teams working on responsible AI, chronicling the potential harms of AI and seeking ways to make it more safe and fair for society. I saw how my employer’s own AI systems could facilitate housing discrimination, make racist associations, and exclude women from seeing job listings visible to men. Outside the company’s walls, AI systems have unfairly recommended longer prison sentences for Black people, failed to accurately recognize the faces of dark-skinned women, and caused countless additional incidents of harm, thousands of which are catalogued in the AI Incident Database.

The scary part, though, is that the incidents I describe above were, for the most part, the unintended consequences of implementing AI systems at scale. When AI is in the hands of people who are deliberately and maliciously abusing it, the risks of misalignment increase exponentially, compounded even further as the capabilities of AI increase.

Open-source LLMs

It would be fair to ask: Are LLMs not inevitably going to become open source anyway? Since LLaMA’s leak, numerous other companies and labs have joined the race, some publishing LLMs that rival LLaMA in power with more permissive open-source licences. One LLM built upon LLaMA proudly touts its “uncensored” nature, citing its lack of safety checks as a feature, not a bug. Meta appears to stand alone today, however, for its capacity to continue to release more and more powerful models combined with its willingness to put them in the hands of anyone who wants them. It’s important to remember that if malicious actors can get their hands on the code, they’re unlikely to care what the licence agreement says.

We are living through a moment of such rapid acceleration of AI technologies that even stalling their release – especially their open-source release — for a few months could give governments time to put critical regulations in place. This is what CEOs such as Sam Altman, Sundar Pichai and Elon Musk are calling for. Tech companies must also put much stronger controls on who qualifies as a “researcher” for special access to these potentially dangerous tools.

The smaller platforms (and the hollowed-out teams at the bigger ones) also need time for their trust and safety/integrity teams to catch up with the implications of LLMs so they can build defences against abuses. The generative AI companies and communications platforms need to work together to deploy watermarking to identify AI-generated content, and digital signatures to verify that human-produced content is authentic.

Stop the race to the bottom

The race to the bottom on AI safety that we’re seeing right now must stop. In last month’s hearings before the US Congress, both Gary Marcus, an AI expert, and Sam Altman, CEO of OpenAI, made calls for new international governance bodies to be created specifically for AI — akin to bodies that govern nuclear security. The European Union is far ahead of the United States on this, but sadly its pioneering EU Artificial Intelligence Act may not fully come into force until 2025 or later. That’s far too late to make a difference in this race.

Until new laws and new governing bodies are in place, we will, unfortunately, have to rely on the forbearance of tech CEOs to stop the most powerful and dangerous tools falling into the wrong hands. So please, CEOs: let’s slow down a bit before you break democracy. And lawmakers: make haste.

David Evan Harris is chancellor’s public scholar at UC Berkeley, senior research fellow at the International Computer Science Institute, senior adviser for AI ethics at the Psychology of Technology Institute, an affiliated scholar at the CITRIS Policy Lab and a contributing author to the Centre for International Governance Innovation.

Two Berkeley Haas faculty named as ‘Best 40-Under-40 MBA Professors’

Berkeley Haas professors Ricardo Perez-Truglia and Anastassia Fedyk have been named to Poets&Quants’ 40-Under-40 Best MBA Professors 2023 list.

Associate Professor Ricardo Perez-Truglia and Assistant Professor Anastassia Fedyk were selected from more than 1,500 nominations from business schools around the world. Berkeley Haas was one of just four schools with two faculty members on the list.

Ricardo Perez-Truglia

Perez-Truglia, a behavioral economist who has been at Haas since 2020, grew up in the Ciudadela neighborhood near Buenos Aires, Argentina. He conducts economics research on various topics including behavioral economics, public economics, labor economics, and political economy. Currently, he is working on “a new project to understand how employers become aware of gender pay gaps among their employees and how they respond to such information.

“Ricardo is one of the most impactful professors I have learned from in my educational career,” wrote student Lauren Gamboa, MBA 25, in her nomination. “He takes complex economic concepts and breaks down the core elements and key intuitions for application into our everyday professional and personal lives. He has influenced how I evaluate potential projects and my overall learning process.”

Asked what he loves most about teaching, Perez-Truglia says, “I have a lot of fun during my lectures. By the end, I may be exhausted, but the experience is incredibly rewarding.” He adds, “I hope that when my students think about price elasticity, they can hear an Argentinean accent in their minds.”

Anastassia Fedyk

Fedyk’s research lies at the intersection of behavioral finance and innovation, employing big data techniques to better understand such important and timely topics as how artificial intelligence affects modern firms. In her teaching, she has been recognized for taking the lead on bringing more sustainability content into the core finance curriculum.

“Anastassia Fedyk has been the best Professor of my Executive MBA program,” wrote Oleksandr Krotenko, MBA 23, in his nomination. “The students truly love her because they feel how deeply she cares about their growth by always transforming even what might seem like less appealing subjects into life-learning experiences.”

When she is not teaching, Fedyk is co-leader of Economists for Ukraine, a group she founded in response to the Russian invasion of her native home. It informs policy on sanctions against Russia, spearheads plans for the reconstruction of Ukraine, supports Ukraine’s education sector, and organizes humanitarian aid on the ground.

“I am grateful for my Ukrainian heritage,” Fedyk told Poets&Quants. “Over the last year and a half, I have been incredibly proud to come from such a beautiful and resilient place.”

Berkeley Haas ranked #1 for finance research

student walking toward faculty building at Haas with campanille in back
Photo Copyright Noah Berger / 2021.

The Haas School of Business at the University of California, Berkeley has been ranked #1 for finance research among almost 150 business schools worldwide in a new global research ranking.

The ranking is based on publications in the top six finance journals as well as a host of other top-tier economics, finance, and business journals from 2000 to 2023. It was prepared by the Olin Wells Fargo Advisors Center for Finance and Accounting Research at Washington University in St. Louis.

Berkeley Haas finance faculty came out on top for per-capita research output over the 23-year period. On average, they published .71 papers in top journals every year.

“We know that our finance faculty is incredibly strong, and this is quantifiable proof that they are true rock stars,” said Dean Ann Harrison. “We are very proud of the strength and influence of our finance researchers.”

The ranking considers articles published only by finance professors, as well as non-finance professors who have published at least three papers in the top three finance journals. 

“Our group provides cutting-edge research in finance, and this ranking is a testament to it,” said Associate Professor David Sraer, chair of the Finance Group. “Given our brilliant junior faculty, I am confident this trend will continue in the future!”