The tragedy of the commons works like this: If everyone follows their self interest and goes fishing in the lake, pretty soon all of the fish will be gone and it will take decades for them to repopulate. If you somehow (how to do it is a coordination problem) arrange for only a small number of people to fish, they can bring in reasonable number of fish every day for many years.

The upshot: In some markets, like consumer electronics, supply and demand regulates things very efficiently. In others, unconstrained individual interest can ruin everything.

In the financial markets, individuals acting rationally for themselves can cause damage to the overall economy: crashes, bubbles, bank runs, etc.