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FACULT Y N E WS & R ES E A RC H

Post-crisis: A Call for New System of Global Governance

Professor Nicole Woolsey Biggart Chevron Chair in Energy Efficiency Director, UC Davis Energy Efficiency Center

Professor Nicole Biggart, director of the UC Davis Energy Efficiency Center, was among 30 distinguished scholars and policy makers attending the first Globalization TrendLab Conference at The Wharton School in April. Their objective: a multidisciplinary inquiry into some of society’s most pressing systemic disruptions. Using the financial crisis as a launching pad, the group discussed the housing bubble, debating whether the crisis stemmed from bad policies and misguided regulations, or whether deeper institutional change and new financial instruments are necessary. When the group began to discuss other risks that cause systemic disruptions, Biggart noted that, “There is nothing more systemic than our environment. Water, air —we all share environmental property. We have new property rights issues, but we don’t have ways of thinking or talking about them because our notion of property rights is rooted in very different understandings. We share systemic risk, but we do not govern ourselves systemically.”

The group called for a new system of global governance that recognizes that countries have been affected differently by the financial crisis and that this has created hostility between nations. Further, the group believes that the current system of “self-regulation” is not working. They also called for experts and policymakers to be more modest, less arrogant and to continue asking questions and doing research to understand systemic disruptions. In September, Biggart participated in a roundtable discussion, co-sponsored by the Aspen Institute, on “Rethinking Shareholder Value and the Purpose of the Firm” at the UCLA School of Law. Leading law and business faculty, business practitioners, institutional investors and mutual fund representatives discussed the purpose of corporations, exploring more nuanced and productive alternatives to “shareholder primacy.”

>> gsm.ucdavis.edu/biggart

Give Air Passengers an “Out” during Delays

Associate Professor Rachel Chen

Assistant Professor Catherine Yang 14 • W I N T E R 2012

Instead of holding customers captive in an idled plane on a tarmac during unforeseen delays, airlines should give passengers the choice to leave or stay—and compensate them either way. Doing so could stave off costly government regulation and increase customer loyalty, ultimately improving airline profits, according to Associate Professor Rachel Chen and Assistant Professor Catherine Yang in their study, “Customer Bill of Rights under No-Fault Service Failure: Confinement and Compensation.” The paper’s third author, Eitan Gerstner, is a former Graduate School of Management professor now working at the Israel Institute of Technology. The paper, forthcoming in the journal Marketing Science, explores existing and proposed federal regulations governing extended passenger confinements due to blizzards and other unforeseen events. The U.S. Department of Transportation requires airlines to let passengers off after three hours on a tarmac or face a fine of up to $27,500 per passenger.

“Because airlines, cruises and other service providers do not see themselves responsible for delays due to weather or other issues that are beyond their control, too often they are reluctant to implement customer-friendly solutions,” said Yang. “But such a policy is likely to be perceived as socially responsible because it promotes customer satisfaction—and reduces complaints by those who suffer the most from captivity.” Chen, who was recently promoted to associate professor, had her study, “Optimal Multiple-Breakpoint Quantity Discount Schedules for Customers with Heterogeneous Demands: All Unit or Incremental?,” co-authored with Lawrence W. Robinson of Cornell University’s Johnson Graduate School of Management, published in the Institute of Industrial Engineers’ flagship journal, Transactions.

>> gsm.ucdavis.edu/chen >> gsm.ucdavis.edu/yang

Profile for UC Davis Graduate School of Management

Winter 2012 innovator  

Winter 2012 innovator  

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