The role of negotiations in achieving Pareto optimality in multi-dimensional cooperation games: implications for the ethical conduct of business

Abstract

Numerous excellent macroeconomic studies have been done concerning the recent and, to some extent, still ongoing financial crisis and the painstaking recovery which has followed it. Not a small number of experts have expressed their puzzlement that such a phenomenon could occur in apparent contradiction to efficient market theory. Through it all, however, orthodox microeconomic theory has remained intact and, seemingly, has not even been seriously challenged. Yet the need to reexamine the fundamental propositions of this theory is obvious as the recent financial earthquake found its epicenter in a consumer debt crisis in the United States, the result of innumerable microeconomic decisions of consumer households.