UCLA Anderson School of Management Blog

Faculty Profile: Keith Chen

Associate Professor of Economics Keith Chen grew up experiencing cycles of intellectual binging and restlessness, which, he says, made school difficult. This intellectual yearning, however, turned out to be a long-term blessing. “I think I was drawn to academia largely because it felt like a profession where habitual and obsessive restlessness wasn’t going to be debilitating,” he says.

In fact, that restlessness has led to research that blurs the lines between traditional disciplinary boundaries, “bringing unorthodox tools to bear on problems at the intersection of economics, psychology and biology,” as he says.

His most current research delves into how language, unexpectedly, influences economic choices. “For example, I’ve been studying a surprisingly strong relationship between how a person's language encodes future time, and how easily they invest in future-oriented behaviors like saving, (not) smoking and safe sex,” he says.

He says being at UCLA Anderson is a perfect fit for him because of the sweeping and inclusive mindset at the school. “The faculty at Anderson are an incredibly broad set of thinkers,” he says. “I think it’s more intellectually diverse than any other business school in the country.”

Professor Chen teaches core strategy and behavioral economics, fields, he says, that appeal to him because they are so accessible. “Economics falls into a kind of intellectual sweet spot,” he says. “Unlike a lot of fields, the fundamental problems aren’t esoteric minutia that take decades of study to even state. They’re understandable by almost anyone with even a little economics training. We have a lot to learn even about very basic economic questions; there’s a lot of work to be done.”

Head to Chen’s UCLA Anderson page for more on his research interests and publications.

DFA's David Booth Talks Investments and Leadership

David Booth, chairman and co-CEO of Dimensional Fund Advisors and benefactor of The University of Chicago Booth School of Business, sat down with UCLA Anderson Dean Judy Olian for a Dean’s Distinguished Speaker Series talk this morning.

In comments preceding the Q&A, Booth counseled students on leadership, management principles and principles learned by experience.

Booth said leadership is about several principles. “Leadership is about achieving most of what’s achievable based upon your goals and available resources,” he said. Further, he said leaders need to have the vision that is the essence of any company, but that they need to be flexible about that vision as the company evolves. With that in mind, he said, “Part of leadership is being able to charge full-speed ahead without knowing exactly where you're headed.” That might require what he termed creative destruction, or the ability to discard or improve things that you’ve been doing. Finally, he said a leader must train people to accept outcomes as they are. “A lot of things are outside of your control,” he said.

Speaking of his time in business school, he said there were four principles that have ben especially helpful as head of his own company: comparative advantage, consumer surplus, profit maximization and the principles of the demand curve.  But, he also pointed out real-life examples where theory meets reality and how the two are reconciled. He also noted a leader needs to recognize that tension and be wary of too much formalization. “You want people to be entrepreneurial,” he said. “For instance, unless it’s a very large expenditure, allow people to make decisions and then figure out if they make sense at the end of the quarter.”

Booth said that DFA was founded on the idea that science was the best way to invest. But he said, “One part is the science of investing, the other part is implementation.” Nobel Prize-winning Economist Eugene Fama is on DFA’s board, and his theory of the efficient market is a key link in DFA’s strategy. “If you look at the last ten years, fewer money managers than expected by chance have beaten the market,” he said. “People just don't believe they can't beat the market. We all have hunches. I have hunches. I'd be glad to share them, but I don't know why anyone would want to trade on my hunches.”

After several questions from Olian and students, the discussion ended with Booth tackling the ways in which behavioral economics relate to the idea of the efficient market. Booth said DFA uses behavioral ideas all the time. “Behavioral economics tells us a lot about how we should present fact to clients. It answers, ‘How should we educate people?’ And it informs how we present our materials.”

Head to the DDSS homepage for more on Booth and other past speakers.

Two Anderson MFEs land BAT Top 5 Hall of Fame

Alec Small

Alec Small and Gert Dekegel, both UCLA Anderson Master of Financial Engineering class of 2014, have landed coveted spots on the Bloomberg Assessment Test’s Americas Top 5 list. They tied at No. 4, with scores in the 99^th percentile on the test taken by more than 100,000 students in 60 countries.

Gert Dekegel

A standardized online exam, the BAT is “designed to identify and screen undergraduates and recent graduate students who are interested in a career in finance and business.”

For more on the Hall of Fame head here. For more on the MFE program head here.

Martine Rothblatt to Entrepreneurs: Be Openminded, Be Practical, Never Give Up

  

Martine Rothblatt (J.D./MBA ’81) joined UCLA Anderson Dean Judy Olian this morning for a wide-ranging conversation that moved from Rothblatt’s time at UCLA and her pioneering work in satellite radio and biotechnology to her most recent work in the nascent science of cyber-consciousness creation.

Rothblatt told the Korn Convocation Hall crowd how she partnered with the late Rene Anselmo to turn her MBA field-study project (commissioned by Hughes Satellite and Communications) into satellite company PanAmSat, which was eventually sold to Hughes for $5 billion in cash and stock. She joked that one thing she didn’t learn in business school was to ask for founders stock up front. She didn’t make that mistake again when she used her experience in the satellite business to launch Sirius Satellite radio, which later merged with rival XM.

Professor Bhagwan Chowdhry Looks For Ways to Involve Businesses in Social Good

 

Professor Bhagwan Chowdhry is looking for ways to involve businesses in social good by providing the right incentives. He says there is a fundamental tension in that social good usually comes at the expense of profits and this tension must be resolved.

We can get the best of both worlds, he says, by involving both socially conscious and regular investors. His research reveals a basic solution: Let regular investors own the businesses, but then be able to sell a security he calls “social impact guarantees” that will partially finance projects. If a business fails to meet certain agreed upon socially beneficial metrics, the investor gets paid back.

To get the full picture, take some time and watch Professor Chowdhry’s interview above. 

For Julines, UCLA is a Family Affair

Eric Juline and his wife, E, are a match made in UCLA heaven. In fact, both their families are. To date, 28 family members have attended the school, and each decade since the ’30s has seen a relative on campus. Both Eric and his father are UCLA Anderson graduates.

Eric graduated with a Bachelor of Arts in economics in ’69 and followed that up with a Master of Science in business administration from the pre-Anderson UCLA business school. He was a partner at Assurance and Business Advisory Services at PricewaterhouseCoopers LLP, has been a UC Regent, president of the UCLA Alumni Association and is now Regent Emeritus.

On top of a continual stream of need-based giving to diverse programs and departments across the UCLA campus, the couple established the Eric and E Juline Faculty Excellence in Research Award, which recognizes excellence in research among UCLA Anderson’s assistant professors. "I believe in our faculty and the valuable research they provide. That’s why I felt it was important to demonstrate in a meaningful way, how their studies still impact my day to day activities,” Eric says about the award.

The 2013 award winners were Felipe Caro and Jenessa Shapiro. Shapiro was recognized for her work on prejudice, stereotype stigma and inter-group dynamics. Caro was chosen because of his research contributions to developing near-optimal solution methods to stochastic dynamic programming problems with learning, and for applying his methods to supply chain management, assortment planning and pricing issues at fast fashion retailers.

When it comes to giving, Eric says the move to self-supporting status for the Full-Time MBA program is a positive step. “I like the idea. I think it sends a message,” he says. That message is one that puts the onus on the school to raise funds, but also creates flexibility in managing the school’s affairs without losing public accountability. “As it relates to admissions and state standards, Anderson is still subject to all of them because it's a public school and always should be,” he says. Moreover, he thinks the public nature of the system creates value through its perceived worth. “Government shouldn’t forget the school’s importance to the state. There’s no better investment that can be made,” he says.

Eric says that as a Regent and as an accountant, he learned that chancellors are in a position—more so than any other—to know how to address the most immediate needs in the system. He thinks anyone ready to give back to Anderson should consider making an undesignated gift, one that allows ultimate flexibility for the dean or chancellor. “Oftentimes, the undesignated gift is the most valuable because it can be used for the greatest need at that moment,” he says. “But, it can be the hardest to give, because you have to have trust.”

And, seeing as their granddaughter (who attended her first UCLA game at two weeks old) hopes to make UCLA her home soon, the family tradition that began so many years ago should live on, and the Julines will continue being thankful for and trusting the institution that has given so much to them.

Start-Up Chile Helps Kick-Start Anderson Entrepreneurs

If you had “start a new company” on your resolution list for 2014, it’s time to get into gear. Not only are there several UCLA Anderson pitch competitions on the way this spring, the first round of applications for Start-Up Chile are due. The accelerator program helps develop startups while inculcating entrepreneurship culture in Chile and is open to ventures worldwide. Selected participants must move to Chile for the duration of the six-month program.

Two UCLA Anderson teams have worked with the incubator thus far. Noah Ornstein (JD/MBA '12) participated while still enrolled at Anderson and launched El Teatro, a theatrical film distribution company.  The El Teatro team also included Jesus Martinez ('12), Kerim Onder ('12) and Craig Muhlrad ('13). "We learned a huge amount, and it wasn't anything we could have learned from stateside analysis or a classroom environment," Ornstein said.

Eric Kriegstein ('12) won seed funding for a company called SeatUp, a mobile-auction platform that enabled airlines to auction off premium seats and unused inventory in the final hours before a flight takes off. Kriegstein found support and networking help from Guillermo Tagle ('91), one of the school's 100 Inspirational Alumni, who founded an investment bank in Santiago.

Start-Up Chile has three application rounds per year, with 100 teams selected to participate in each round. Application dates for 2014 are March 4 to March 25 (arrival dates: July 21/August 11), June 2014 and September 2014, with exact dates TBD.

Besides its outstanding alumni, Anderson has a robust footprint in Chile through its Global Executive MBA joint program with Chile’s Universidad Adolfo Ibáñez. The 15-month program is designed to provide an insider's view on doing business in the region, and each session offers an intensive classroom-learning experience coupled with guest speakers and visits to local companies, says Bob Pettit, Executive Director of GEMBA for the Americas.

For more on Start-Up Chile and Anderson’s relationship and connections with the nation and its entrepreneurial culture, head to Assets Digital.

Kimberly Freeman ('02) Joins UCLA Anderson As Assistant Dean for Diversity Initiatives and Community Relations

Earlier this week, UCLA Anderson Dean Judy Olian announced that Kimberly Freeman (’02) is the school’s new assistant dean for diversity initiatives and community relations.

Freeman comes to Anderson from the Southern California Gas Company where she served as the director of community relations and led departments that coordinated philanthropic contributions, community outreach and employee involvement. Kimberly worked for the Sempra family of companies for over 24 years. 

In addition to her Anderson MBA, Freeman holds a Masters in Public Policy from USC (where she also served as an adjunct professor) and a Bachelor of Science in industrial engineering and operations research from UC Berkeley. She currently serves on several boards, including the Women’s Foundation of California, the Housing Authority of the City of Los Angeles (HACLA), the California African American Museum (CAAM) and the Leaders’ Quest Foundation. Freeman succeeds Linda Baldwin who retired in July.

As the assistant dean for diversity initiatives and community relations, she will spearhead the school’s initiatives to enhance its community through diversity and create an inclusive culture among students, faculty and staff.  She also will be responsible for community partnerships and outreach.

Freeman took time out from her hectic, first-week schedule to chat with the UCLA Anderson Blog.

Why did you decide to return to UCLA Anderson?

My view is that I never left Anderson.  Since graduation, one of my passions has been giving back to the community by serving as an ambassador for the school in its efforts to recruit diversity candidates for its MBA programs.  Among its many benefits, this position as assistant dean allows me to merge my passion with my professional background and skills in community involvement, relationship management and diversity outreach.

What are your responsibilities and priorities?

My responsibility is to enhance diversity and inclusion for key stakeholders here at the school and to raise recognition for the UCLA Anderson brand within the broader community. My priorities are building high quality programs that serve our students, faculty and staff, adequately addressing issues of concern as they may impact diversity, and, in support of our mission, to leverage resources here on campus and out in the diverse communities we serve.

You’re just getting started so this might change, but as of now, what is you’re your biggest challenge?

I’d like to think of my challenge as an opportunity and that is to create a robust, sustainable network for recruitment, retention and support of students, faculty and staff around these issues of diversity and inclusion that help move the school forward.

Associate Professor Andrea Eisfeldt Receives 2013 Smith Breeden Prize

Associate Professor of Finance Andrea Eisfeldt and her co-author, Dimitris Papanikolaou of the Kellogg School of Management, received the 2013 Smith Breeden Prize (list coming soon). The Smith Breeden Prize is awarded to the best paper published in the renowned Journal of Finance and is presented at the annual American Finance Association meetings. This marks the second time Eisfeldt’s work has been recognized by the AFA; she previously received recognition for a distinguished paper in the Journal.

In their prize-winning paper, “Organization Capital and the Cross-section of Expected Returns,” Eisfeldt and Papanikolaou develop a model that analyzes the effect of organization capital on asset prices and argue that “shareholders consider firms with high levels of organization capital to be riskier than firms with more physical capital.” Organization capital, as defined in the paper, is “a production factor that is embodied in the firm’s key talent and has an efficiency that is firm specific.” In other words, organization capital constitutes the firm’s know-how; the labor related knowledge, talent, and processes that make the firm productive.  This know-how resides in the firm’s key talent; an asset that ``walks out the door at the end of every day.’’  The paper is the first to measure how the value of organization capital manifests in a market sense.

Importantly, unlike physical capital, for example, land, machinery, or any hard asset, the company cannot own organization capital.  The fact that companies are at risk of losing key employees whose presence contributes to that value implies that firms with high levels of organizational capital present a greater risk to shareholders and investors. “Tech companies are a great example of high organization capital firms,” says Eisfeldt. “we can all name several high profile tech firms whose value stems in a huge way from key company executives and developers whose departure could be devastating for the firm’s value.”

Since such firms are riskier investments, investors should expect a higher rate of return. Eisfeldt and Papanikolaou found that investors in such companies expect and receive 4.6 percent risk-adjusted excess returns.  This is a large effect given that average excess returns on the overall market have averaged around 6% over a long time period.

Eisfeldt says she plans to continue her research into the implications of organizational capital and is joined in this pursuit by UCLA Anderson Professors Bhagwan Chowdhry, Bruce Carlin, Mark Garmaise and Hanno Lustig, all of whom have done research into this area. The implication of the research is significant as the companies of the future, such as those in the technology space, will only see their levels of organizational capital increase.

As to the award, Eisfeldt says, “It makes me feel even more excited about the research and grateful for a fantastic co-author.  I think this work is important and it is also a lot of fun.”

Professor Benartzi Celebrates New Year With Fresh Accolades

UCLA Anderson Professor and Co-Chair of the Behavioral Decision-Making Group Shlomo Benartzi celebrated the New Year with accolades in two industry-leading publications.

NAPA Net — The Magazine, published quarterly by the national association of plan advisors, named Benartzi to its list of “10 Most Innovative People in the Defined Contributions Industry.” The magazine noted how Benartzi’s insights “when he applied behavioral economic principles in a simple and elegant manner” have helped drive creative solutions for retirement in a changing 401(k) landscape.

Benartzi also caught the eye of 401kWire, a retirement industry publication, who named him the ninth most influential person in the retirement industry for 2013.

Head to Benartzi’s webpage for more on his work.