If we want our regulators to do better, we have to embrace a simple idea: regulation isn't an obstacle to thriving free markets; it's a vital part of them.

For a crowd to be smart, the people in it need to be not only diverse in their perspectives but also, relatively speaking, independent of each other. In other words, you need people to be thinking for themselves, rather than following the lead of those around them.

Lack of confidence, sometimes alternating with unrealistic dreams of heroic success, often leads to procrastination, and many studies suggest that procrastinators are self-handicappers: rather than risk failure, they prefer to create conditions that make success impossible, a reflex that of course creates a vicious cycle.

This intelligence, or what I'll call "the wisdom of crowds," is at work in the world in many different guises. It's the reason the Internet search engine Google can scan a billion Web pages and find the one page that has the exact piece of information you were looking for. It's the reason it's so hard to make money betting on NFL games, and it helps explain why, for the past fifteen years, a few hundred amateur traders in the middle of Iowa have done a better job of predicting election results than Gallup polls have.

What the investment community does like is short-term measures designed to boost share prices.

There does seem to be some evidence that as people get older, they procrastinate less, perhaps because they feel the pressure of time more.

Bubbles and crashes are textbook examples of collective decision making gone wrong. In a bubble, all of the conditions that make groups intelligent - independence, diversity, private judgement-disappear.