Strategic interactions and conflicts
Some time ago, we posted an expert article about compliance and game theory. Several readers may have wondered what compliance has to do with gaming. Game theory belongs to the realm of mathematics and economics. The term is a misnomer because modern game theory does not focus on board games and the like. “Strategic interaction theory” or “strategic conflict theory” would be more accurate descriptions.
Strategic Interactions
It is also quite a bit better to think about the topic of compliance in terms of strategic interactions. During the onboarding process, for example, a financial intermediary and client pursue their own strategic goals, which differ fundamentally from each other, however. The FI wants to land a new client without getting bogged down in compliance problems; the client wants to make use of the services provided by the FI. So, there is no winner in this “game” – the other is automatically the loser. The interactions are successful when both “players” are able to pursue their strategic goals. The behavior of the FI is highly contingent upon what the client does. These are all typical phenomena analyzed in modern game theory.
