Many in the financial industry today espouse the so called Wisdom of Crowds principle, whereby collaborative decision making is deemed more accurate and fruitful then standard quantitative analytics. With the advent of globalization financial systems have grown large and complex.  Recent turbulence in financial markets underscores the importance of looking at financial systems as a single, inter-dependent entity with cooperative control rather than a series of inter-connected islands of information and activities.

One of the driving forces behind efficient and stable financial markets is proper information sharing; another is the need for cooperative strategies that allow complex financial transactions to be mutually beneficial, leading to a type of fiscal equilibrium wherein profits are maximized in proportion to managed risk.  In fact, a number of modern economists have taken lessons learned in Game Theory and applied them to financial markets by invoking the so-called Nash Equilibrium rule.

In broad terms, the Nash Equilibrium states that if several (for example financial) institutions are making decisions at the same time, and if the outcome depends on the decisions of others, we cannot predict the results of the choices of multiple decision makers if we analyze those decisions in isolation.

The corollary to the Nash rule (and the basis for so called coopetition) is that a savvy decision maker must do what is right for both the individual and the group (as spoken by Russel Crowe in his brilliant portrayal of Nash in the movie A Beautiful Mind). Had I not seen The Gladiator the night before, my expectations of an equilibrium may have been a tad more appropriate.  As such I was waiting for Nash to dispatch Ed Harris with a cry of "Are you not entertained?" and then take on the Dean of Princeton with his imaginary host forming a single column by the chess tables. 

The segway aside, the concept of a market equilibrium lays the ground work for broad adoption of Collaborative Computing in Financial Services, since presently, financial computing systems are fragmented and incapable of facilitating the type of cooperative data processing necessary to achieve the equilibrium.  In short, without the supporting technology to make informed, cooperative decisions a financial institution will not be able to take optimal, risk-averse actions.