The Future of Finance

THE TOULOUSE SCHOOL OF ECONOMICS MAGAZINE

Living economics

#16 SPRING THE FUTURE 2018 OF FINANCE

Daniel Ershov on Johannes Hörner Ariel Pakes on Patrick Pouyanné the Google Play on how Waze uses why industrial on the energy Store its users organization matters challenge Editor�' message #16 Content�

Looking New� & event� to the future 4 Appointments & prizes 5 Save the date Last year marked TSE’s 10th anniversary, a milestone in the long history of economics in Toulouse. 2017 also saw our endowment strengthened through the renewal of our Laboratoire d’Excellence status and an exciting new certification for our “CHESS” graduate school project - Challenges in Economics and Christian Gollier Quantitative Social Sciences. We are grateful for and proud of these strong signals of support which will help our institution tremendously. Researc� TSE wasn’t built in a day. It took more than 30 years for Jean- 6 Reducing search costs Jacques Laffont and the leading academic peers he convinced THE FUTURE Daniel Ershov to join him to accomplish his dream of building a world-class economics department in Toulouse with bright, intense academic OF FINANCE 8 Why would Waze life. We are lucky to be now living that dream, but our ambition send you off-track? for this new year does not waver. We want to aim higher Johannes Hörner and attract the very best talents to the south of France. Our Jean Tirole minds are focused on the future; our new building, now almost 16 Jean Tirole complete, will be another great asset in making our community one of the best Th inker� places in Europe to do research. As will the “10-vision project” committee which Is the financial system safe? 10 Industrial organization is currently coordinating a community-wide effort here to map out our new 10- The ongoing changes led 18 Catherine Casamatta finally matters year strategic path for both research and education. by automation, blockchain technology, cryptocurrencies, Blockchain: a miner miracle Ariel Pakes tax reforms, shadow banking The TSE community is working hard on the economic impact of cutting-edge 20 Christian Gollier and such forth are reshaping the technologies and this edition features a special dossier on the future of finance. We need to better invest Financial institutions and regulations have always rapidly evolved, yet the ongoing finance world like never before. Actor� for the future changes led by automation, blockchain technology, cryptocurrencies, tax reforms, 24 Tackling the energy shadow banking and such forth are reshaping the finance world like never before. 22 Marianne Andries challenge To help readers better understand and assess these changes, we present here Who’s afraid of news? Patrick Pouyanné some of the latest work and perspectives from the TSE faculty.

We are also delighted to include in this edition an extensive interview with the CEO of Total Patrick Pouyanné on the future of the energy industry, as well as an in- Campu� depth interview with Ariel Pakes, the 2017 Jean-Jacques Laffont Prize laureate, on industrial organization and its policy implications, as well of course as the atest 28 Graduates placement figures news and results from our faculty. 30 Career-smart students Trimestrial magazine of Toulouse School of Economics 31 TSE polls Wishing you a pleasant read, and a very happy new year 2018, 21, allée de Brienne - 31 015 Toulouse Cedex 6 - FRANCE - Tél. : +33 (0)5 67 73 27 68 Publication Director: Christian Gollier - Managing Editor: Joël Echevarria Editor in chief: Jennifer Stephenson - Production Manager: Jean-Baptiste Grossetti Christian Gollier, TSE Director With the help of: Claire Navarro - James Nash Graphic design and layout: Yapak Jean Tirole, TSE Chairman Pictures: ©Studio Tchiz, ©Fotolia, ©Istock, ©Total.

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tse-fr.eu 3 New� & event�

Appointments & prizes TSE helps to project a new Save the date voice for research in Europe EconPol Europe (the European Network for Economic and Fiscal Policy Research) is a unique collaboration TSE celebrates award of €10.8 million for 29-30 17-18 of policy-oriented university and non-university MARCH CHESS project research institutes that will contribute their scienti- M AY 2018 2018 The international jury of the “Ecoles universitaires de recherche” chose to support TSE’s fic expertise to the discussion of the future design of project Toulouse Graduate School Challenges in Economics and Quantitative Social the European Union. The network was commissioned Sciences (CHESS) with €10.8 million over 10 years. by the Federal Ministry of Finance and founded in 2017 by the Ifo Institute together with eight other th renowned European research institutes. 10 Biennial Environmental Postal regulation With its cross-border cooperation on fiscal and eco- Economics and industrial nomic issues, EconPol Europe aims at promoting Conference performance Ethical Asset growth, prosperity and social cohesion in Europe Valuation and, in particular, at providing and the Good Society research-based contributions to the successful development Two new In his latest book, TSE vice-president of the European Economic and 24-25 18-19 books Christian Gollier builds a bridge between Monetary Union (EMU). APRIL M AY welfare economics and finance theory to 2018 2018 by Jean-François Bonnefon provide a framework for ethical valua- Reasoning Unbound, Thinking about Morality, tion capable of establishing what asset Delusion and Democracy, was published by prices should be on the basis of our Palgrave Macmillan at the end of 2017 shared moral values. See pages 20-21. CGD 16th Joint and details the way human reasoning Vincent Working Group Workshop is aimed at cooperative social life. Jean- Réquillart on Global Health on Industrial François Bonnefon (TSE-CNRS-CRM) has Procurement Organization also co-edited Moral Inferences, featuring discusses food the latest research on the relationship economics between morality and reason. The TSE-INRA researcher engaged with Nutrition & Santé CEO Didier Suberbielle to debate Vincent’s recent work on 4-5 24-25 the importance of public policies on the nutritional and envi- MAY M AY New international partnership with ronmental impact of food. 2018 2018 National University of Singapore Milo Bianchi TSE and the University of Toulouse th Capitole are delighted to announce wins funding for ﬁ nancial Financial 6 Toulouse they have signed a new collabora- literacy project Ingela Alger Econometrics Economics and tion with the National University of Conference Biology Workshop The TSE-UTC researcher will have the presents her research Singapore (NUS). Starting in 2018, this support of the Think Forward Initiative new agreement will allow students for a research project on the impact of at ‘Women in Science’ event to complete semester or year-long financial literacy on financial vulnerabi- This CNRS-sponsored series of events aims to shed light exchanges. NUS is consistently ranked lity. The Initiative brings together a range on female scientists in different disciplines. Ingela Alger as one of the world's top universities. of experts and research to find out how (TSE-IAST-CNRS) talked about her research on motivation tse-fr.e�/event� and why we make financial choices. and morality.

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DANIEL ERSHOV ON THE GOOGLE PLAY STORE NATURAL EXPERIMENT Reducing search costs

aniel Ershov joined TSE in September 2017 as an assistant professor. His main research interests are fi rm competition, market D regulation, and online markets. He recently worked on the Google Play Store recategorization of applications and tells TSE Mag about his main fi ndings. Contrary to expectations, the Internet I empirically study these effects using did not eliminate consumer search new data from the Google Play mobile costs. Indeed, with the proliferation of app store, a large online market where product varieties, “discoverability” on- most products are free to download. line is a major concern for consumers, App stores have a large number of pro- firms and regulators. Firms may not ducts: thousands of new apps appear want to enter or invest in high quality every week, and it is costly for consu- products if they cannot be found by mers to search for new products. consumers. Regulators are concerned that platforms, by changing search al- App stores are broadly separated into Daniel Ershov gorithms and consumer search costs, “game” and “non-game” areas, and TSE assistant professor can influence firm entry, investment in- surveys suggest that consumers pri- centives and the degree of online com- marily search for apps by browsing petition. These considerations played a through categories in the app store (e.g., The re-categorization of the store was a role in the European Commission’s 2.4 “Productivity Apps”). I take advantage surprise to game developers. Additionally, billion euro fine to Google. of a natural experiment: a re-categori- it did not affect the “non-game” area of zation of part of the Google Play store. the store and non-game developers. I In March 2014, Google split its game use difference-in-differences to capture App stores have a large number categories from 6 to 18. Industry obser- three key effects: First, 33% more games enter relative to non-games after the of products: thousands of new vers believe that this reduced consumer search costs. Before the change, consu- re-categorization. Second, most entry apps appear every week, mers browsing through the categories effects are driven by “niche” app types and it is costly for consumers would see different app types together that were more difficult to find before to search for new products (e.g., Family Games and Action Games). the re-categorization. Lastly, the qua- Consequently, consumers looking for lity of the new games – as measured by an app type would not necessarily find consumer ratings – fell after the split re- confirm existing theoretical predictions, Consumer welfare should improve due most of the welfare gains come from While there is a large existing litera- it easily. lative to new non-games. These results but are new to the empirical literature. to more product variety and lower mar- reduced search costs. Nonetheless, ture on search costs, it mostly focuses ginal search costs. However, consumers about 25% of the welfare gains are on the effects of search costs on prices Number of new games compared to new non-game apps should also like quality. Conditional on from increased product variety, which and largely ignores non-price effects I show that welfare increases .3 the number of products, a greater share overwhelm the small negative effect such as entry or product quality. These by almost 60% following the of low quality products would reduce of the change in quality. These results non-price effects are important, parti- consumer welfare. A larger share of have important implications for an- .25 re-categorization, and most of cularly in the numerous online markets the welfare gains come from low quality products could also make ti-trust cases in online markets. They where prices are uniform (e.g., iTunes) or it harder to find high quality products. are the first evidence suggesting that .2 reduced search costs are zero (e.g., SoundCloud). In a working when consumer search costs increase paper, titled “The Effect of Consumer To measure and decompose the welfare (the inverse of the decrease I observe), Search Costs on Entry and Quality in .15 The overall impact of the re-categoriza- implications of the re-categorization, I consumer welfare can decrease via two the Mobile App Market”, I examine how tion on consumer welfare is not easily set up a structural model of consumer channels: a direct decrease due to hi-

consumer search costs in online mar- Non-Games Games/ N New N New .1 measured since most apps are free. In search and demand, and firm entry. I gher search costs, and an indirect de- kets affect market structure, product 2012m1 2013m1 date 2014m1 2015m1 addition, the different effects of re-cate- show that welfare increases by almost crease due to a foreclosure effect that variety, quality, and consumer welfare. Split announced in December 2013, and took place in March 2014 gorization can point in opposite directions. 60% following the re-categorization, and reduces product variety.

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JOHANNES HÖRNER ON SOCIAL LEARNING AND INTERNET PLATFORMS Why would Waze send you off-track?

specialist in economic theory, Johannes Hörner joined TSE in Sep- tember 2016 from Yale through the AXA chair, attracted by the A Toulouse lifestyle, the TSE project and its unique environment. We asked him about his forthcoming article in the Quarterly Journal of Econo- mics, written with Yeon-Koo Che on the optimal design for social learning, or how to implement systems that are better for everyone collectively, even when they put more strain on some individuals. What was the idea behind how these two different optimums, the this article? overall optimum and the individual optimum, balanced each other. I met Yeon-Koo Che (Columbia University) at Yale in 2014 when he came visiting. What are possible strategies for He is a specialist in recommendation Johannes Hörner recommendation companies? TSE - CNRS systems and I have spent a lot of time working on experimentation. From our It depends a lot on the market they’re discussions rose the idea that it could into, and on their recommendations. feedback. Michelin, for example, gives be interesting to have a look at the so- An example of how to circumvent this out restaurant recommendations based cial learning aspects of recommenda- issue is, when possible, to ask experts to only on their experts’ taste and opinion. Companies should consider The second issue is that users might What are the main results tion systems, especially for internet weigh in on the recommendations that understand and recognize a skewed from your article? platforms. should be issued. For instance, Pandora But in many cases, experts can’t be incentives more seriously recommendation. In the Waze exa- asks musicologists to dissect music used, and the ideal strategy then is to when they plan their mple, the individual could know or es- One of the main conclusion is that com- and assess numerous characteristics, send skewed recommendations to a Waze has an interest in sending recommendation strategy timate that the road Waze recommends panies should consider incentives more such as rhythm, instruments, etc. This few users when the company needs to an individual driver to a road isn’t the best one and decide not to fol- seriously when they plan their recom- data allows the radio website to give know something. For example, Waze low the service’s directions. This makes mendation strategy. Another key insight that could be blocked or slow better recommendations on newly re- has an interest in sending an individual information on its status. This driver’s users less confident about the service. is that their capacity to use their users if the service doesn’t have any leased music without having to skew driver to a road that could be blocked GPS will then let Waze know whether Even worse, users can understand that to receive information depends on their information on its status some users’ playlists to try to get their or slow if the service doesn’t have any the road is slowed and then allow the the service is sometimes using them as credibility. The more credible they are service to update its recommendations guinea pigs, and then assess, for each perceived (and, usually, then, the more for all the users. recommendation, whether it’s a real or pertinent are their recommendations), the We know that recommendation sys- 40% Clicks on test one. more tolerant users will be with skewed tems, such as Google, Pandora or Waze, 35% Google Search results What are the issues with such results. Finally, we show that their credi- need a lot of information to improve by search position 30% a strategy? So we tried to understand what hap- bility is proportional to their consumers’ their results. They need to know, from 25% pens when Pandora or Waze know that knowledge of being tested, and of their user feedback, that a website isn’t per- There are two issues with such a strate- users shouldn’t realize that they are capacity to get information without using 20% tinent or about the quality of a recent gy. First, it means that some users will being used as guinea pigs, because if consumers’ feedback. Something that music album. This need for informa- Click Rate 15% sometimes receive terrible recommen- the information they deliver is too ob- would be very interesting to analyze in tion incites them to skew their recom- 10% dations so that other users can benefit viously a test, it will make users very the future, is how those platforms’ re- mendations for some users so they can 5% from their information. This is a clas- wary of their services. We tried to find commendations can sometimes affect learn what they need to know and in re- sic case when firms should try to sub- out how far companies can go before themselves, such as when Waze tells all turn propose overall better recommen- 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 sidize individuals for these types of hurting consumers’ trust. its users to take a road and thus causes dations, and we wanted to understand Search Rank Position recommendations. new traffic pressures.

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ARIEL PAKES, HARVARD Industrial organization finally matters

very year, the Jean-Jacques Laffont Prize rewards an international- ly renowned economist whose work combines both theoretical and More and more lawyers are E empirical research. Last year’s recipient was Ariel Pakes, professor learning economics and you of economics at Harvard. Much of his impressive methodological work has have to be able to explain it in been incorporated into the way government agencies evaluate the impact words that aren't equations. of policy changes. TSE Mag caught up with him to discuss his work. If it's a good model, you should What future do you see for Many IO tools are also being used for be able to do that empirical industrial organization? environmental policies - carbon taxes, standards on cars for emissions, coal It’s getting richer all the time; it can ex- plants - and public finance. For ins- more theory as well as more econome- plain many things. Certain subfields are tance, for the study of the implemen- trics and data. picking up on IO and using the tools that tation of taxes and other government we have developed to analyze different policies, demand systems developed in Dynamics in our field means the deve- policies. For example, in the US, where IO are used to evaluate welfare. lopment of products, R&D, telecom- health insurance is a big issue, there has munication. We do not quite have our been a lot of work on the implications Other than when I do methodology models ready to analyze that, but we're of the entitlement program and its cost, rather than actual applications, there getting closer! You don't stop doing re- and on the incentive schemes that could are several issues open for people like search because you are not at a place make the cost of US healthcare go down me, such as moving to a more careful where you can give answers yet, or the judge. It was just like I was giving a these people who leave might actually at no cost to quality. analysis of dynamics which will require you will never get to a place where you At the time of the Microsoft class on the topic. I must admit I was go to the product of the other merging have answers. case, I was asked to be on the rather impressed. More and more lawy- firm. A big factor, if you do the demand government's side. I thought about ers are learning economics and you have system appropriately, will be the frac- to be able to explain it in words that tion of people who leave and go to the What are your thoughts on current it for a while and I said: “I don’t antitrust policy, especially in aren't equations. If it's a good model, other product. The higher that propor- know the answer and neither the light of increasing corporate you should be able to do that. tion, the higher the price increase, ac- consolidation? do you, and you won't know the cording to the theory. answer in the next three years Is there any particular The institutions and courts have become methodology that you would like They make serious attempts, when they more and more able to listen to econo- to see being used for antitrust don't have time to do a whole demand mists and economists' models. I'm ac- to the logic of our argument. I imagine policies? system, just to estimate the fraction of tually quite surprised! Fifteen years ago, it will get even better. I think the story people who would leave and go to the nobody used our tools. You would go in, of the courts' relationship to economics The basic issue for antitrust authori- other products. They do a survey asking, one side would argue one thing, the other is that it takes them a number of years ties is that they have limited time: they “If we took this product out of the mar- side would argue the other thing and to catch up to research, maybe 10, but would use our tools all the time if they ket, what other products would you go there would be no model and no data. eventually if the research is good and could. However, shortcuts have been to?” That's an attempt to mimic the the methodology is correct, it gets into developed, like the diversion ratio. If you demand system, and you can do that Now the courts listen quite frequently the court system. increase your price a little bit, you get relatively quickly, especially if it's a bu- and attempt to use our tools. Most of an extra dollar from people who stay, siness firm, where there aren't that the time they don't have the time to do There was a court decision on Amazon and you lose price minus marginal cost many consumers. It makes sense from the point of view of the model, at least Jean Tirole and Ariel Pakes the research that we would consider for and Ebay on books, and I was asked to from the people that leave due to the an article, but they listen very carefully read the decision. I was surprised with price increase. When you do a merger, for some things.

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... Jean-Jacques There are mergers of content providers taped somebody about doing something If you look at the dynamics, it's not always with cable television networks, and the like setting prices in a meeting. the case that collusion is a bad thing, Laffont Prize authority that had to sign off on these hence "the rule of reason" rather than mergers started using very complicated In the ADM case [Lysine antitrust case], "per se violation". The problem with doing economic models to figure out what the reason they were able to get a convic- that more generally is that you will get a laureates 2017 2016 2015 would happen after the merger. While tion is they actually sent someone in with whole load of court cases, because it's Ariel Susan Elhanan they don't bring these models to court, a tape recorder to one of the meetings. very hard to distinguish between what's Pakes Athey Helpman it can allow them decide whether or not We know of mechanisms that can support in society's interest and what's just rai- it's worthwhile going forward with the cartel-like behavior. So for an IO econo- sing price to make more money! case. The fact that the models aren't mist, a cartel-like behavior is a beha- brought out in court doesn't mean they vior that is above our equilibrium prices. We know about analyzing the cartel haven't been used in the process of de- issue, but the issue is that you have to ciding what goes to court. The equilibrium we usually think about is: make judgments on whether this tradeoff I set my price to do the best I can given between more products or more invest- How do you think antitrust what everybody else is doing; they set ment versus prices going up is good 2014 2013 2011 2010 2009 their prices the same way, and then no- or bad for consumers. Often it will be authorities can respond to tech Joseph Eric Robert Robert Roger body has an incentive to deviate. good for some consumers but bad for firms such as Google? Stiglitz others. It's a very complicated tradeoff Maskin Townsend Wilson Myerson At the time of the Microsoft case, I was A cartel will set a price above the equi- but we know how to make it; whether asked to be on the government's side. I librium price, so you have to ask, "Why the courts or the government listen to thought about it for a while and I said: “I do other people follow?" Because if it's us is different. don’t know the answer and neither do above the equilibrium price, it means that you, and you won't know the answer in the other people are not in equilibrium, As a member of the TSE scientific the next three years.” Somebody has to and they have incentives to price lower council, what is your view on its make a decision and in cases like that, and make more money. The reason they evolution? people who are closer to the industry don't is that there is some punishment 2008 2007 2006 2005 2004 are likely to know more than me, if I don't scheme in the future: it becomes a dyna- I've watched it grow at lot. Jean-Jacques Richard Stephen Daniel Peter A. James have the tools to investigate it in the ap- mic problem. They know that if they de- Laffont invited me to the first confe- Blundell Ross McFadden Diamond Heckman propriate way. crease their price, then tomorrow I will rence in 1992, when he invited a bunch kill them. Price much lower and you will of people from the US who he thought A similar question came to me when we have a price war. were doing interesting things. Most of worked with General Motors. They gave my famous stuff wasn't yet published. us their data, took our models and started We know a lot about how to handle car- using them for their own stuff. Their head tels. One of the problems is that the courts TSE has grown a tremendous amount of research came to me one day and said: have typically needed some smoking gun. and the big difference in the last few “What about dynamics? What should we They must be able to tell that you have years has been the number of junior fa- 2003 2002 2001 2000 1999 do dynamically? What new products do done something illegal. culty here. That's terrific! Older people Olivier To n y Dale James William we produce?” And I said: “At this stage, like me accumulate responsibilities, you know better than me!” There are If this is the case, in the US it's a “per se we have to run around a lot, we're on Blanchard Atkinson Jorgenson Mirrlees Nordhaus things for which we are not really able violation”, which means that it doesn't boards of editors and various other to help very much yet. matter if it has harmed society or not, things. The fact that you have a large you're guilty. In Europe, that's not the case, young group that interacts with each On collusion and cartels, we are much it's the “rule of reason” which says that other and keeps each other excited is more able – we've had quite a bit of theo- maybe it was productive for society to very important and it's very new. They ry and a bit of empirical work. The poli- have a cartel. Prices are higher, so consu- look like they're having a blast. It feels cy issues are often related to the courts mers pay more – that's bad. On the other like a dynamic institution. There aren't who find it very difficult to bring a case hand, as prices are higher you may de- that many places with this many young 1997 1996 1995 1994 1993 unless there's what's called a “smoking velop new products and now there is an people doing research, both empirical Hayne Paul Kenneth Jacques Robert gun”, for instance, when somebody has incentive to build new products. and theoretical. Leland Samuelson Arrow Dreze Solow

12 tse-fr.eu tse-fr.eu 13 THE FUTURE OF FINANCE 16 Jean Tirole on the post-crisis environment

18 Catherine Casamatta on cryptocurrency ledger stability

20 Christian Gollier on ethical asset valuation

22 Marianne Andries on optimal information Th e fu ture of fi nance

JEAN TIROLE ON THE POST-CRISIS ENVIRONMENT Is the financial system safe?

he 2008 fi nancial crisis, like the euro crisis, had its origin in the failure of regulatory institutions. Despite heavy scrutiny and swee- T ping reforms, is the fi nancial system now any safer? In these edited extracts from his book ‘Economics for the Common Good’, TSE chairman Jean Tirole Jean Tirole looks for answers in the post-crisis fi nancial landscape. TSE Chairman No financial instrument or transaction taxpayers to major risks, and that the What if low interest rates are not a tem- is bad in itself, provided that a) the risk numerous abuses should be eliminated. measures in the form of countercyclical Other concerns stem from the com- is well understood by the parties using porary phenomenon? What if monetary equity capital buffers, a greater use of bination of geopolitical risk and local it, and b) it is not used to put an uninfor- policy is unable to reenergize the mar- If reforms are implemented, Low interest rates centralized exchanges instead of over- economic conditions — for example, med third party at risk. Properly used, kets and prevent recessions and unem- the financial system will be less Very soon after the 2008 crisis began, the-counter markets, institutional re- in Europe political shocks such as financial instruments contribute to the ployment? One certainty is that there the US, European, and British central risky: Basel III seems to be forms (for example, the creation of the the UK’s Brexit vote, the political un- dynamism of the economy. It is more has been a decrease in interest rates headed in the right direction European Single Supervisory Mechanism) certainty over the EU, the structural constructive to engage in the inevitably banks provided much liquidity and the- on safe assets since the 1980s. If low — all are genuine improvements. weakness of certain economies, the technical debate about market and regu- reby reduced interest rates to close to interest rates are here to stay, we will significant proportion of unproduc- latory failures than to reject wholesale zero — in other words, to negative levels have to rethink macroeconomic policies. Safer systems allowing for inflation. Japan has had an Danger areas tive loans still on European (especially the achievements of modern finance. Regulators, central banks, and govern- interest rate below 1 percent since the Italian) banks’ balance sheets, and the Nothing is without risk ments have been forced to intervene There are still, however, major areas mid-1990s; in 2017, it is zero. of risk. For one thing, regulatory prin- intimate connections between banks We need to respond vigorously to the fai- to rescue financial institutions they did What if low interest rates ciples differ from their implementation and sovereign states. There is uncer- lures of financial regulation, and to reduce not regulate through bailouts, buying up leave us unable to reenergize Low interest rates in downturns provi- and supervision. It is important that tainty about how China will transition the frequency and scale of crises, but we toxic products, and loosening moneta- de liquidity. Yet low interest rates have the transposal of international accords from a catch-up economy to one on the markets and prevent cannot eliminate the danger. Prudential ry policies. Reforms should now aim to gigantic redistributive effects (for exa- into national laws and the supervision the frontiers of technology and insti- recessions and unemployment? regulation and supervision are more art prevent as much as possible the sha- mple, from savers to borrowers) that of banks by national regulatory authori- tutional design (including managing its than science, but there are some gene- dow banks difficulties from spreading are not always desirable. They can also ties not vitiate the spirit of the accords. credit bubble and reforming financial ral principles we can use. to the regulated sphere. But it is undeniable that these instru- encourage financial bubbles and risk-ta- markets). In the emerging economies, ments make financial supervision more king, laying the foundation for the next Macroeconomic concerns include slower over-indebtedness in foreign curren- In 2008, a number of economists, in- The current state of our knowledge should complex, that “financial innovation” is crisis. And when nominal rates hit zero, global growth, more volatile financial cies may put businesses and banks in cluding myself, recommended protec- encourage us to be humble. Economists often just a way of getting around the the central bank can no longer use them markets, and the challenge of how to difficulty if the local reliance on com- ting regulated institutions against the still do not know enough about how pru- rules and exposing small investors or to boost the economy. exit low interest-rate policies without modities is associated with inadequate risk of contagion from the unregulated dential regulation ought to operate, in- compromising growth. risk management. sector; increasing their levels of equity cluding the extent to which investors S&P 500 Financial volatility since 1990 S&P 500 Volatility capital and putting greater emphasis on should be held responsible for their in- 90 2008 Financial Crisis liquidity; making regulation more coun- vestments in regulated institutions and, 80 tercyclical; monitoring the pay structures of course, about the proper calibration Shadow banks of capital and liquidity requirements. 70 1997 Mini-Crash of senior bank officers so as not incen- The current growth of the unregulated “shadow” financial sector is likely to pose May 2010 Flash Crash 60 1998 Ruble Crisis tivize excessive risk taking; allowing se- problems in the future, mirroring the lack of oversight of the great investment Internet Bubble European Debt Crisis However, if the reforms are implemented, 50 curitization, but supervising how it is banks before 2008. 40 Japan Asset Price China Stock used; monitoring the rating agencies; the financial system will prove to be less Bubble Market Crash 30 rethinking the “regulatory infrastruc- risky than before: the Basel III reforms seem to be headed in the right direction. For Jean’s latest research in this area, read his paper with Emmanuel 20 tures”; and, in Europe, creating a super- An increased requirement of equity capital, Farhi ‘Shadow Banking and the Four Pillars of Traditional Financial 10 visor on the European level within the the introduction of a minimum liquidity Intermediation’ at www.nber.org/papers/w23930 0 ECB. Regulatory reforms have gone in 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 part in this direction. ratio, the inception of macroprudential

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CATHERINE CASAMATTA ON CRYPTOCURRENCY STABILITY Blockchain: a miner miracle

riginally designed to validate transactions in the Bitcoin virtual currency network, blockchain technology looks set to revo- O lutionise 21st-century fi nance. Expected effects include the disappearance of obsolete intermediaries, improved security and drastic reduction in transaction costs. Catherine Casamatta teamed up with fel- low TSE researchers Bruno Biais and Christophe Bisière, as well as McGill University’s Matthieu Bouvard, to analyse the stability of blockchain protocol using game theory. Blockchain technology represents a very their current block and by mining a new effective solution to a generic problem: block of transactions, attached to the how to maintain a decentralised, shared winning “parent” block. The process exerts a negative externality on all other register of transactions and assets when of searching for and sharing solutions Consensus Formal analysis suggests miners. This gives rise to an arms race its participants do not necessarily trust continues, creating a sequence of vali- Catherine Casamatta and dissensus in which each miner ends up over-in- each other? dated blocks, representing the current blockchain design, by UTC - TSE The researchers also investigate how vesting. This analysis points to another state of the register. A single chain re- generating complementarities frictions typically associated with dis- source of inefficiency in blockchain’s de- flects a perfect consensus among par- and vested interest, How do we maintain sensus and forks relate to these econo- centralised design. ticipants about validated transactions. transactions and solved blocks, and are a decentralised, shared register is subject to instability mic forces. For instance, communication only rewarded for solving blocks. Their delays may generate transient forks as Summing up when its participants do not analysis uncovers two important eco- Wasteful forks some miners do not immediately rea- necessarily trust each other? nomic forces at play in the blockchain. coordination motives, inducing miners The researchers’ analysis suggests Miners, however, may choose to dis- lise that a new block has been solved. First, miners’ actions are strategic com- to keep working on a minority chain, that miners’ incentives are key to the card certain blocks, starting a fork that Some miners may also derive extrin- plements. Indeed, their rewards depend and sustaining persistent forks. Unlike production of a robust consensus in a sic benefits from creating a fork: it can deviates from the original chain. This temporary forks that only rely on coor- blockchain. While miners benefit from How does a proof- on the credibility of the chain on which allow them to void previous transac- creates competing versions of the led- dination motives and would arise with coordinating on a single chain, thereby they are solving blocks. This credibility tions and recover the corresponding of-work blockchain ger, reducing the credibility and reliability atomistic miners, equilibria with per- maintaining consensus, coordination is higher if more miners are active on it. cryptocurrencies (“double-spending”), protocol work? of the blockchain, especially if the fork sistent forks depend on miners taking motives may also lead them to abandon Hence, miners benefit from coordina- or to push technical solutions that give is persistent. Even if, eventually, all mi- into account how their actions affect the portions of the blockchain. This jeopar- In a blockchain, the flow of transactions ting on a single chain, which they can them a competitive edge (“upgrades”). ners agree to attach their blocks to the value of their rewards. dises the blockchain’s key function, i.e., to be validated is directed to participants achieve by playing the “longest chain The researchers incorporate these fric- same chain, the occurrence of the fork producing a stable and immutable his- called “miners”. Each miner stores these rule”, that is by considering the longest tions in their model and show that while is not innocuous. The blocks in the chain Overall, this analysis suggests that the tory of transactions. In addition, vested transactions in a block, adds a special chain to be the correct one (Nakamoto, they may act as triggers (instead of suns- eventually abandoned are orphaned. They blockchain design, by generating com- interests, by counteracting coordination transaction corresponding to his reward 2008). However, the same coordination pots), the same fundamental interplay have been mined in vain, and the cor- plementarities and vested interest, is motives, may lead to the persistence of for that block, then tries to validate that motives sustain equilibria with forks. of coordination motives and vested in- responding computing power and en- subject to instability. multiple active chains. block. To do this, the miner must solve If a miner anticipates all other miners ergy have been wasted. Moreover, the terests as in the frictionless case un- a difficult numerical problem, using the will create a fork, his best response is transactions recorded in the orphaned derlies equilibria with forks. brute force of trial and error. The suc- to follow them. A fork blocks may be called in question. Original chain cessful miner disseminates this block Finally, they look at the computing capa- For more details, see and its solution (the “proof-of-work”) Second, they identify a countervailing B1 Bn—1 Bn B city that each miner installs. Because the ‘The Blockchain Folk within the network. The other miners Coordination game force: if a miner has accumulated rewar- B’ Theorem’ a working paper by Bruno Fork difficulty of the mining process is typically check the solution is correct, and the ds on a given chain, the miner has a Biais, Christophe Bisière, Matthieu To analyse blockchain’s stability, Catherine t adjusted upwards when the total compu- t t t t transactions in the block are valid, and and her colleagues build a model in “vested interest” in this chain remaining 0 1 n—2 n—1 n ting capacity in the network increases, a Bouvard and Catherine Casamatta. mark their acceptance by abandoning which miners instantaneously observe active. Vested interests may counteract miner’s investment in computing power

18 tse-fr.eu tse-fr.eu 19 The future of finance

CHRISTIAN GOLLIER ON ETHICAL ASSET VALUATION We need to better invest for the future

y controlling the allocation of capital, financial markets hold the key to the great challenges of our time, such as the fight against B poverty, climate change, and cancer. In his latest book, ‘Ethical Asset Valuation and the Good Society’, TSE co-founder Christian Gollier suggests that this power can only be harnessed if we can determine the financial prices that are compatible with the public good. In particular, he shows how the valuation of long-term risk and time, based on transpa- innovation and growth. Has the tradeoff distant future, an aggregate risk pre- energy, transportation, health, science, rent moral principles, can help to guide our choices for the future. favored the maximization of growth, or mium of 2.5 percent should be used and education. These prices are sub- Can financial markets decentralize an in Europe, workplace safety against the minimization of risk? for very long maturities. ject to much debate among experts; efficient allocation of scarce resources? corporate profits, reduced inequality but these debates remain inaccessible Financial markets penalize firms that to the public, and this is unacceptable. There are strong arguments, well-studied versus growth, or more consumption As well as improving our at TSE, for believing that markets are not today or in 200 years? Debating social increase the aggregate risk by raising decisions, cost-benefit their cost of capital. A 1-to-2.5 percent Ultimately, collective decisions should good at eliciting our collective values or values should be at the root of our de- Christian Gollier aligning private interests with the public mocracy. If these values are incompa- TSE Director analysis is an important tool in risk premium is in line with the equity be made by comparing costs and be- good. Agency problems such as moral tible with observed market prices, then the fight against populism premium imposed by markets on riskier nefits, using a coherent system of va- hazard and adverse selection inhibit mar- public authorities should implement cor- firms. Much more worrying is the ab- lues. This includes a value for delaying ket efficiency, and the inability to trade rective actions. will be more than 50 times wealthier. sence of any formal penalization of consumption (an interest rate), a value with future generations prevents mar- This context justifies a high discount It is socially desirable to adjust the dis- risk in the evaluation of public policies for risk acceptance (a risk premium), and kets from efficiently valuing assets and The price of time rate of 4 per cent per year. count rate to the risk profile of each in most countries. values for all the non-monetary impacts investments that benefit future genera- investment project by adding an in- of our actions. Two prices drive most financial decisions: tions. More importantly, corporate pro- However, deep uncertainty engulfs the vestment-specific risk premium. In kee- the price of time, which is the interest Cost-benefit analysis fits do not fully internalize the impacts distant future. Just as households make ping with the calibration of the interest As well as improving our decisions, rate, and the price of risk. The choice of Many countries have established impli- from production on social welfare. For sacrifices by saving more when their fu- rate, a risk premium of around 1 percent cost-benefit analysis is an important interest rate determines whether we do example, the emission of greenhouse ture income becomes more uncertain, should be used at short maturities, for cit prices to evaluate the actions of pu- tool in the fight against populism. Lack too much, or too little, for future gene- gases remains mostly free of charge, we should collectively make more effort projects whose risk profile is similar to blic institutions. These include prices of evaluation reinforces the impression rations. Too high an interest rate inhi- despite their destructive impact. to improve a more uncertain future. To the macroeconomic risk. But because of for human lives, time lost, natural as- that policies are driven by ideology rather bits investment for the future. Too low encourage investment, we need to lower the deep uncertainty surrounding the sets, and carbon, in sectors as diverse as than the common good. Instead, demo- an interest rate induces excessive in- the discount rate slightly below twice the cracy can be strengthened by forcing po- vestment, forcing people to sacrifice Two prices drive most anticipated growth rate of consumption liticians to make explicit the values on too much current well-being. Net value of a portfolio betting on low-carbon companies financial decisions: the price for risk-free benefits materializing wit- $1,500 which their decisions are made. hin the next two to three decades. For $1,000 of time, which is the interest The level of our collective aversion to ine- more distant time horizons, deep un- $500 quality is a key determinant of the so- rate, and the price of risk certainty justifies discount rates close $– Find out more cially desirable interest rate. In a growing $–500 to 0 per cent. Christian refers economy, investing for the future in- $–1,000 quantitatively frustrated readers creases intergenerational inequality. So $–1,500 $–2,000 of Ethical Asset Valuation to his If markets are unable to aggregate our the interest rate should be the minimal The price of risk $–2,500 other recent book, Pricing the collective values, how can we evaluate rate of return on a safe investment that Many investments for the future in- $–3,000 Planet’s Future (2012), which private and public acts? How should we, compensates for this increased inequa- crease collective risk, as their benefits $–3,500 for example, compare environmental lity. If Western consumption per capita are larger when consumption is greater. provides more extensive technical protection with job protection, lives in continues to grow at 2 percent per year, Penalizing risk-increasing actions there- details.

Bangladesh versus purchasing power people living two centuries from now fore reduces investment, which inhibits

20 tse-fr.eu tse-fr.eu 21 The future of finance

disappointing, news. Such information risky asset. The marginal cost of infre- One way to help information-averse aversion is a direct consequence of the quent observation is due to the loss in agents is to lump news together in bundles agent’s attitude towards risk. expected returns when more wealth is delivered at precise points in time. Such placed in the risk-free asset. Unique to behavior is consistent with company dis- Fearful thinking Marianne’s model, the marginal bene- closure policies organized around sche- fit comes from a relief from the stress duled earnings announcements. Similarly, MARIANNE ANDRIES ON OPTIMAL INFORMATION To analyze how agents cope with their of receiving information. monetary policy and other macroecono- fear of information, Marianne looks at mic announcements, such as employ- how the frequency of information ob- More risk-averse investors are also more ment numbers or quarterly growth, are servations impacts the valuation of risky inattentive, Marianne finds. Attention de- disclosed at precise points in time, and lotteries. She finds her model justifies Who’s afraid of news? creases in periods of high volatility, even mostly scheduled in advance. the experimental evidence that shows when higher expected returns keep the agents’ valuations of risky assets de- difference between risk-adjusted re- Agents do not want to receive informa- crease when they are given more fre- turns and the risk-free rate constant. tion too often. However, when they do quent and more detailed information. This prediction reflects an increase in observe information, they want it to be the marginal cost of information as risk as precise and “transparent” as possible. ear of disappointment can make us fearful of new information, increases and is in line with recent em- In Marianne’s framework, it can be be- says TSE researcher Marianne Andries, and this has important Financial institutions can foster pirical evidence. neficial if suppliers sometimes refrain F implications for our understanding of investor behavior. In a new more investment by providing from releasing information; but the re- working paper, she proposes a theory of inattention based on the idea of ‘distress’ signals following Information supply lease of partial or distorted information information aversion. Sometimes, her results suggest, withholding infor- is not beneficial. mation may serve us better than transparency. sharp market downturns How can suppliers of information best serve the needs of information-averse When information costs are due to tech- recent working paper, titled ‘Information However, Marianne warns that this investors? Marianne’s model provides form of information withholding ge- nological limitations, finding ways to Aversion’, Marianne’s theory of inatten- the basis for a theory of optimal infor- nerates asymmetric information, and provide more information can greatly im- tion is solely based on fear of informa- She also studies how agents balance mation. Her results suggest financial agency problems are likely to arise (for prove market efficiency. But Marianne’s tion, rather than on cognitive limitations the cost of paying attention to the eco- institutions can foster more invest- example, between an investor and her research suggests such policies are not or the external costs of acquiring in- nomic environment with the benefits of ment by providing “distress” signals fol- wealth manager). To account for infor- always desirable. “Experiencing the rol- formation. In her model, disappoint- making better informed decisions. In an Marianne Andries lowing sharp market downturns. While mation aversion, optimal compensation ler coaster of life can be stressful,” she ment-averse agents optimally decide illustrative example, Marianne consi- TSE - UTC an in-depth treatment of this area is left contracts need to provide the necessa- says. “A natural way to avoid this stress to stay away from some sources of in- ders an information-averse investor for future research, she outlines a few ry incentives, while minimizing the in- is to close your eyes for the ride.” formation. This framework has rich im- who manages his or her wealth to fi- implications. formation needed to enforce them. plications reflecting key observations on from both the cognitive constraints and nance consumption over time, alloca- the exogenous costs commonly used in ting savings between a risk-free asset, Experiencing the roller coaster information and risk-taking behavior in the lab and in the field, among partici- the economics literature on inattention. and a risky asset yielding higher ave- of life can be stressful. A natural pants in financial markets. rage returns. way to avoid this stress is to Under disappointment aversion, agents The price of uncertainty close your eyes for the ride Information costs inflate the probabilities of outcomes that Marianne shows that this investor op- Economic models generally assume that investors are no more averse to disappoint. As information arrives, each timally decides to observe the value immediate than to delayed risks, but a new working paper by Marianne, ‘Horizon- Together with co-author Valentin Haddad piece of news creates scope for disap- of the risky portfolio at equally spaced Dependent Risk Aversion and the Timing and Pricing of Uncertainty’, suggests This idea that people might want to (UCLA), Marianne starts by characteri- pointment. The agent therefore prefers to points in time. In between observa- that allowing for a decline in risk aversion at longer time horizons can be an stay away from information draws a zing the endogenous information costs receive less fragmented information and tions, the investor consumes determi- invaluable new tool for future research in macro-finance. very different picture to that provided by implied by disappointment aversion, observe simultaneous bundles of news nistically from a risk-less portfolio, and standard models of inattention. In her and finds them to differ fundamentally in which good news can cancel out bad, allocates any remaining wealth to the

22 tse-fr.eu tse-fr.eu 23 Actor�

PATRICK POUYANNÉ, TOTAL CHIEF EXECUTIVE OFFICER Tackling the energy challenge

t the helm of Total since 2014, Patrick Pouyanné answered our our activities, it is more than a priority, questions about the company, the energy industry and its main it is a cardinal value, it is the key to the A challenges, including climate change. The CEO also shares his success and durability of our activities. career advice for TSE students and graduates. What trends or uncertainties What are the current challenges Faced with strong volatility in the ener- are you most focused on? for Total? gy markets, we went back to some basic ideas. We must excel in the things we For more than three years now, the oil The oil industry, and Total in particular, control, our operational excellence, our market has been highly volatile. Even Arctic Lady gas carrier have been able to adapt, since mid-2014, costs, and our capital allocation in order though supply and demand have started to the drop in oil prices and to the new to manage the break-even cost of the balancing again, this underlying volatility business environment that came with it. company’s assets. will not disappear tomorrow. What are the main stakes to ensure our own ability to meet to- What are the climate challenges of In such an environment, our size and our for the energy sector in the years morrow’s demand, be it in a few years the energy industry? integrated model are clearly assets, al- We are price takers - we can’t influence to come? or in several decades. Ignoring our long- lowing us to mitigate the financial im- the prices - but we can manage our in- Coal fueled the 19th century term perspectives would threaten our The climate is a fundamental issue for pact of the oil price cycle thanks to the vestments and our costs, and we conti- and oil fueled the 20th century. In the coming decades, the oil & gas in- future and ultimately our very existence. our societies, and especially for compa- decoupling between our upstream and nue to manage Total based on an oil price The 21st century will be dustry will have to collectively confront a nies in the energy sector such as Total. downstream results; the strength of of 50$ per barrel. dual challenge: provide reliable and avai- We already know that, oil reserves won’t Fossil fuels account for a significant part our balance sheet is also an advantage. powered by gas lable energy at a low cost to the world’s be fully developed due to the challen- of CO2 emissions and, thus, of global In 2014, our break-even was 100$ per and renewables. growing population while tackling the ges of climate change. That’s why we warming. Total understands this res- barrel; in 2017 it has fallen below 30$ challenges posed by the climate and the must focus on developing the lowest ponsibility and has also identified the per barrel (before payment of dividends). environment. Tomorrow’s energy must cost and most competitive assets first; opportunities that it raises. This improvement is the result of hard Yet, as 2018 begins to unfold, our world be low cost, readily available and clean; those that are both cleaner as well as work. It meant putting into place a viable is witnessing very strong geopolitical the three criteria are equally important. profitable (even when prices are low). Being concerned about climate change investment policy covering the whole uncertainties, with many conflicts and means caring about the evolution of en- price cycle, ensuring a competitive cost a general trend towards isolationism… • Energy should be cheap because low- With this in mind, we tend to favor na- ergy markets. Coal fueled the 19th cen- structure, maintaining a high level of a shift to every-man-for-himself. The cost energy is required to generate tural gas. It is the cleanest and most tury and oil fueled the 20th century. The operational excellence and, most impor- Middle-East immediately comes to mind, economic development & social pro- flexible fossil fuel, which makes it the 21st century will be powered by gas and tantly, being exemplary when it comes with the issues in Syria, Iraq, Yemen and gress for billions of people who right- ideal partner for renewables that have renewables. These technological ad- to safety. Because safety is critical to all Libya but there are also significant ten- ly seek to improve their lives. intermittent operations. The substitu- vances are slow and very progressive. sions in eastern Ukraine or in Korea. tion of coal by gas in electricity produc- There will be no overnight revolution, we International terrorism also remains a • It must be readily available because tion will be the simplest and fastest must be prepared to patiently and reso-

threat to consider. customers have come to expect en- way to cut CO2 emissions. Carbon pri- lutely back them for the long run. Such ergy to be easy to access and to use cing mechanisms would be very useful changes require effort, innovation, in- In these uncertain times, companies at any given time. in this regard, making gas more compe- vestment and cooperation.

have the choice between two stances: titive than coal by setting a CO2 price, in to delay important decisions awaiting • And it must be clean, obviously, be- addition to cutting the gas supply costs. The Paris Climate Agreement has been clarifications that may never come, or cause energy is central to climate issues. fundamental to driving the energy tran- to take bolder decisions, to seize op- We must also develop new technologies, sition, because energy is at the heart of portunities while balancing risks. One Our industry works on a long-term ho- such as carbon capture, usage and sto- the climate debate but also because en- thing is clear: the best approach, for our rizon. The decisions we make today rage (CCUS) which will allow us to reach ergy is a vector of economic development industry, is to be agile and flexible, to be shouldn’t hinder our long-term strategy. carbon neutrality in the second half of and social progress. When they signed able to adapt and thrive in any scenario. In other words, we should invest today the century as fossil fuel use continues. the Paris Agreement in December Patrick Pouyanné CEO Total tse-fr.eu 25 Actors

... 2015, the individual countries committed to meeting the expansion in generation. turn this issue into an opportunity to de- to playing a major role to tackle climate Total’s strategy takes account of these velop new businesses: in 20 to 30 years, change and, more broadly, to support sus- trends. In 2035 we will produce more gas Total will still be a major player in the oil & tainable development. However, beyond as well as more electricity, notably via re- gas industry, much more focused on gas the countries themselves, one must keep newables, and less oil! This is also why than oil, and more integrated across the in mind the action that will be taken by we completely abandoned coal in 2016. value-chain, though our business activi- companies. Most of the implementa- ties will have evolved so as to capitalize tion of the Paris agreement will be un- Today, Total is developing a low-car- on growth opportunities in renewables. dertaken directly by private enterprises! bon business, including energy efficien- As investors are needed to achieve the cy, biofuels, solar power, energy storage What would be your advice ambitions of the Paris Agreement, eco- and innovative energy solutions & ser- to TSE graduates? logical progress can only come in concert vices for our customers. These strategic with economic growth. activities are gathered in our new GRP In the open, constantly-evolving world branch (Gas, Renewables and Power) in we live in, one must be determined, bold, How does Total react which we are investing close to a billion and team-spirited. to climate change? dollars every year. In today's business, you need solid trai- Total’s ambition is to become the res- Total actively contributes to industry ini- ning to respond appropriately, and some- ponsible energy major. At a 20-year ho- tiatives such as the Oil & Gas Climate times urgently, to immediate problems. rizon, our ambition takes into account Initiative, a collective engagement in favor You need a taste for hard work because, the International Energy Agency’s (IEA) of the climate from 10 companies repre- more than ever, nothing comes easily 2°C scenario and anticipates a portfolio senting more than 20% of the global pro- for anyone and finding one’s place only of assets that includes 20% low-carbon duction. The Initiative recently launched a comes through one’s skill and contribu- energies in 2035 (as opposed to 5% cur- 1 billion dollar fund dedicated to the de- tion. Nothing is ever easy in the company rently) and a larger share of gas than oil velopment of carbon capture usage and because the subjects are often complex in the remaining 80%. According to the storage (CCUS) which will be necessary and need in-depth analysis and criti- IEA’s outlook, oil & gas will still cover to reach carbon neutrality in the second cal assessment to find the appropriate th 40 to 50% of world energy needs in 20 half of the 20 century. We also recently answers. One must not be put-off by years’ time, even following the imple- signed a deal with Statoil and Shell to coo- the first stumbling-block. You have to mentation of the Paris Agreement. While perate on these technologies in Norway. rise to the challenges and nurture a de- world electricity demand is growing fas- sire to progress. ter than overall energy demand, gas and That’s how, within our Group, we want to renewables will make key contributions contribute to the climate challenge and to You must also be bold, show imagination, make proposals, share ideas, and be innovative, because, at the speed at which the world is changing today, yesterday’s solutions won’t fit to today’s challenges, and even less so tomorrow’s. You must dare, dare to stand up and speak, dare to express what you believe to be right, that’s how you will contribute to solving problems.

Finally, you must be a team-player, because a company is a collective endeavor which isn’t fit for mavericks or individua- lists: the optimum of the whole is greater than the sum of optimums for each La Mede bio-refinery individual. Solar plan in Chile

26 tse-fr.eu 93% feel that their positions % GRADUATE match their Master 88 specialty PLACEMENT % FIGURES 68 Results of a poll sign their employment conducted 6 months contract before after graduation March 2017 graduation % CLASS 53 of 2016 find a job in a different find a job within country from their origin 6 months KEY EMPLOYERS Airbus, Air France KLM, Capgemini Consulting, Deloitte, Engie, European Central Bank, Google, L'Oréal, OECD, Regulatory Bodies (ARCEP, ARAFER,…), Société générale, Suez, United Nations, For more World Bank, ... % information 67 and to submit hold an executive are hired in a internship or job offers: permanent position position [email protected]

28 tse-fr.eu Campu� TSE POLLS 360° TRAINING Career-smart students Is blockchain nowledge is the key to enter the professional world, and our students are extremely well-prepared in this the future regard. Professional behavior is also crucial in building an excellent career. Since its inception, TSE has been K very active in making sure students master the entire job application process, from writing impressive motivation letters and résumés to performing brilliantly in interviews. Teamwork is another vital skill, especially of ﬁ nance? under stress on intense projects. TSE has implemented numerous initiatives to help students develop their careers, team-spirit and knowledge of the professional world. GIVE YOUR OPINION ON DEBATE.TSE-FR.EU

Business Energy trading High-level Networking challenge in talks Day 2017 London TSE offers its students The sixth edition of the TSE Business Several teams from TSE took part in this Business and Academic Talks, given Networking Day took place on November challenge which gathers students from by economists and researchers from 24, bringing together more than 50 com- French business schools and British uni- a wide range of sectors. These events panies and institutions from across Europe versities. Organized by the ESCP Europe allow students to learn about new eco- as well as more than 600 TSE students. Energy Society, it allows students to ex- nomics theories or practices but also, The wide range of career opportunities periment with trading through simula- through the IAST Distinguished Lectures, offered by these companies and ins- tions and to attend high-level conferences to learn from other social sciences. TSE titutions were presented at 24 confe- and workshops on the banking indus- firmly believes that the future of social rences. Career workshops dedicated to try, led by professionals from interna- sciences lies in interdisciplinarity and stu- econometrics and statistics were also tional companies such as BNP, BP, EDF, dents are always encouraged to broa- organised with guests from the banking, ENGIE and TOTAL. TSE is proud to sup- den their perspective on the issues they insurance and consulting sectors. For the port the event and encourages its stu- study through the help of sociology, po- first time at BND, 22 companies conduc- dents to participate every year. litical science, psychology, and other so- ted interviews at the forum, recruiting cial sciences. for both internships and full-time jobs. “All these events have been very helpful This annual event is also an opportu- and allowed me to better prepare for the nity for students to improve their résu- Career interviews.” més and motivation letters through the Université Toulouse Capitole services and courses Anna Maria Hupa, TSE 2016 graduate, Analyst at Google to get a new picture taken by a profes- To assist students in the sional photographer. Finally, a workshop job market, TSE shows them how to de- on the evolution of job searching took termine and present their strengths and RECENT POLL RESULTS FROM TSE DEBATE: place to provide students with the latest weaknesses in preparation for interviews. tips and platforms for contacting com- The courses let students practice job in- panies and institutions. terviews, learning how to convince fu- More ture employers. Networking techniques, information 54% 88% 80% “The Business Networking Day was extre- job search and professional orientation on the BND: think economic growth believe tommorow's would regulate more mely helpful to me during my time at TSE. " are developed during the classes, en- is necessary to eliminate Europe will be federal strictly the food industry Maria Paula Caldas, TSE 2016 graduate, suring TSE students are well prepared poverty Economist at Deloitte for a stimulating and successful career. tse-fr.eu/careers debate.tse-fr.eu

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