Prevailing view in the 1970s and 1980s Most academic economists and policy-makers in the period immediately following the collapse of Bretton Woods readily acknowledged the potential benefits of co-operative behaviour, but viewed these gains as small in practice.
In a world characterized by growing economic interdependence and cross-border spillovers, it stood to reason that something could be gained by operating in a more coordinated manner. Such actions, they believed, would minimize negative externalities and lead to Pareto-improving outcomes in which all parties would benefit and the losses inherent in non-co-operative Nash outcomes could be avoided.