The Price of Anarchy

America is devoted to capitalism and democracy. However, recent economic events have cast some doubts on the consequences of allowing America's banks and financial industry (stockbrokers and dealers in bonds) to practice their trade without any regulatory mechanisms. Mathematics has some insights to offer here. For a long time the study of economic games has shown that "rational behavior" can yield a poor outcome for all the players in the game. Sometimes society at large bears consequences of the poor outcomes of individual behavior. This raises the possibility that regulations about the playing of such games may lead to better outcomes not only for the players but also for the society in which the games are being played. Here we discuss this circle of ideas.