ABSTRACT
Government regulation increases exponentially with the complexity of markets to maintain institutions that work in the public interest; otherwise markets would become chaotic. There is a large scope for governmental regulation in areas in which markets are not aligned with social interests. Instead of regulation, governments can nudge people into doing the right thing thereby improving their lives. Regulation is needed to stop abuses, for example, manipulation of students by for-profit colleges. Safety issues need oversight to prevent disaster—from bus companies to blood supplies. People did not expect to benefit in the long run from greedily profiting at the expense of others. The decline in such a belief system and the concomitant increase in opportunistic behavior necessitated the increase in government control of markets. Government regulation increases exponentially with the complexity of markets to maintain institutions that work in the public interest; otherwise markets would become chaotic.
