MIT Conference on the digital economy, London post-show — Erik Brynjolfsson and Andrew McAfee

Erik Brynjolfsson and Andrew McAfee

MIT Sloan’s Erik Brynjolfsson and Andrew McAfee

Erik Brynjolfsson and Andrew McAfee speak with Dave Vellante and Stu Miniman from theCube for the live post-show to the MIT Conference on the Digital Economy: The Second Machine Age to wrap up the themes from the day, the takeaways, and the questions that still need to be answered.

MIT Initiative on the Digital Economy: http://mitsloan.mit.edu/ide/

On April 10, 2015, the MIT Digital Economy Conference: The Second Machine Age, led by Erik Brynjolfsson, director of the Initiative on the Digital Economy, and Andrew McAfee, co-director of the Initiative on the Digital Economy, featured a series of discussions that highlight MIT’s role in both understanding and shaping our increasingly digital world.

Erik Brynjolfsson is the Schussel Family Professor of Management Science, a Professor of Information Technology, and the Director of the MIT Center for Digital Business at the MIT Sloan School of Management. 

Andrew McAfee is a principal research scientist at the MIT Center for Digital Business.

Clearing houses could be the next source of chaos — Simon Johnson

MIT Sloan Prof. Simon Johnson

From The Financial Times

Financial shadows are dangerous. Even more dangerous are interactions between poorly understood shadows and essential financial intermediation activities. And most dangerous is when officials and private sector executives encourage a class of transactions that supposedly provide modest risk mitigation, while really building a disguised form of systemic risk on a grand scale.

It was not mounting losses at Countrywide, the failure of Lehman Brothers or the imminent collapse of AIG that spelt disaster in September 2008. It was the connections between those lightly regulated businesses and Citigroup, Bank of America, Goldman Sachs, Société Générale, Barclays, UBS and Deutsche Bank.

Where is the next generation of systemic risk hiding in plain sight? Look carefully at central clearing counterparties, or clearing houses, which are expanding due to the post-crisis requirement that standardised swaps – derivative transactions, including credit default swaps, that have standard terms along important dimensions – be cleared centrally.

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MIT Conference on the digital economy, London post-show — Jean-Jacques Degroof

Jean-Jacques Degroof, SF , PhD '02

Jean-Jacques Degroof, SF , PhD ’02

MIT Sloan alumnus, Jean-Jacques Degroof, SF ’93, PhD ’02, sits down with Dave Vellante and Stu Miniman from theCube for the live post-show to the MIT Conference on the Digital Economy: The Second Machine Age to get his take on the day’s talks.

MIT Initiative on the Digital Economy: http://mitsloan.mit.edu/ide/

On April 10, 2015, the MIT Digital Economy Conference: The Second Machine Age, led by Erik Brynjolfsson, director of the Initiative on the Digital Economy, and Andrew McAfee, co-director of the Initiative on the Digital Economy, featured a series of discussions that highlight MIT’s role in both understanding and shaping our increasingly digital world.

Jean-Jacques Degroof, SF, PhD ’02, is an MIT Sloan alumnus. 

The Taxi-Meter effect: Why do consumers hate paying by the mile or the minute so much? — Catherine Tucker

MIT Sloan Professor Catherine Tucker

MIT Sloan Professor Catherine Tucker

From Slate

When I get a taxi for the 15-minute ride from my office to the airport, I have two choices. I can hail a cab on the street, and pay a metered fare for the 4.6-mile trip. Or I can walk to the local Marriott and pay a fixed fee of $31.50.

Truthfully, I’m always a lot happier paying the fixed fee. I’m happier even though it probably costs more in the end. (A congestion-free trip on the meter comes out to about $26.) Sitting in a cab watching the meter tick up wrenches my gut: Every eighth of a mile, there goes another 45 cents—tick … tick … tick.

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The arrogance of the disciplinarians — Roberto Rigobon

MIT Sloan Professor Roberto Rigobon

MIT Sloan Professor Roberto Rigobon

From The Hill

People love to use moral hazard as an excuse to inflict pain on others. So do governments, as we are seeing as the European Union once again threatens Greece with severe measures for that nation’s failure to fully implement the EU’s harsh austerity measures. The argument is extraordinarily simple: if a country cannot discipline itself, then we will teach it discipline through financial lashes. After all, didn’t Greece bring this pain on itself?

A similar mindset drove debt restructuring in Argentina in 2001. The U.S. treasury wanted to make Argentina an example for the whole Latin American region: If Argentina did not reduce its fiscal deficit to zero as promised, the argument went, the nation would deserve to suffer and the government would need to go. Indeed, Argentina did not reduce its deficit to zero, but it got it down to 0.6 percent in the third quarter of 2001. This effort by the Argentinean government was, unfortunately, unaccompanied by similar efforts in its provinces, but still, it was a massive success. But not to the enforcers, who basically said the efforts were not good enough.

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