Nonrival

May 25, 2026

Human experts + AI summaries - on public policy, economics, and technology.

AI Can Predict Financial Crises Ten Times Better Than Traditional Methods, New Research Shows

nber

• Researchers built an AI model that analyzes $40 trillion in financial holdings data and vastly outperforms existing methods at predicting which institutions will engage in dangerous fire-sale trading during market stress.
• The deep learning system has more than ten times the explanatory power of traditional approaches for predicting asset price movements during financial crises.
• The study shows that even accounting for how markets might adapt to AI-based regulation, these predictive tools could significantly improve financial stability by helping regulators target interventions more precisely.

Companies Rushing to Deploy AI Face Legal Blindspots About Who's Responsible When Algorithms Make Decisions

harvard_corpgov

• As companies move AI from pilot programs into core business operations, they face uncharted legal questions about privilege, confidentiality, and liability when AI takes over tasks previously done by humans.
• AI tools that take meeting notes, communicate with customers, or act as executive 'digital twins' create new corporate records and blur lines of accountability in ways that could expose companies in litigation or regulatory scrutiny.
• Companies need to carefully define what roles AI plays, establish clear human oversight, and consider how AI deployment affects legal protections before integrating these tools into sensitive workflows.

Scientists Are Rushing to Use AI Without Understanding the Consequences

issues

• AI adoption in scientific research has surged from 37% to 58% of researchers in just one year, but only 27% feel adequately trained to use these tools and just 22% of US researchers think AI will improve their work quality.
• While AI can dramatically speed up tasks like literature reviews and data analysis, hurried adoption risks prioritizing speed over rigor and could undermine the deep understanding that underpins scientific expertise.
• The scientific community needs deliberative forums and updated standards to guide AI integration, rather than letting funding pressures and "publish or perish" incentives drive haphazard adoption.

In the News

AI Can Now Find Security Flaws Faster Than Hackers — But Only If Companies Can Fix Them Fast Enough

harvard_corpgov

• Anthropic's new AI tool Mythos can discover thousands of high-severity vulnerabilities in major software systems, potentially giving defenders an advantage over attackers for the first time in years
• The real challenge isn't finding flaws but whether companies can fix them quickly enough before hackers get similar AI capabilities and exploit the same weaknesses
• Corporate boards need to prepare for a flood of newly discovered security risks and ensure their organizations can prioritize and patch vulnerabilities faster than ever before

Analysis

When Private Lenders Flee, Governments Step In as the World's Emergency Bankers

nber

• Researchers analyzed 1.2 million official loans and grants by governments since 1790, revealing that states become major international lenders during crises while private creditors dominate in normal times.
• During wars and financial crises, government-to-government lending surges massively, driven primarily by great powers providing heavily subsidized loans to allies and strategic partners.
• This pattern of official crisis lending has persisted for over two centuries but remains largely ignored in standard economic models of international finance.

Also Worth a Look

• Prison sentences for financial crimes cut reoffending by 43 percentage points, new research finds (aea)
• Popular College Psychology Interventions Don't Actually Help Students Succeed (nber)
• Why a Major Federal Program to Boost Hiring of Disadvantaged Workers Isn't Working (nber)
• New Research Shows That Prosecuting Minor Crimes May Actually Increase Future Offending (behavioral_scientist)
• Banning Phones in Schools Actually Works, New Study from Brazil Shows (nber)
• The US Has Quietly Bent the Health Care Cost Curve, Saving Nearly $1 Trillion (nber)
• Supply Chain Disruptions Make Monetary Policy More Effective at Fighting Inflation (nber)