Can the MFA Be Rescued From the Overdemandingness Objection?

In Endörfer and Larue (2024), we argue that Heath’s Market Failures Approach makes excessive epistemic demands on market participants in imperfectly competitive markets. Stabell attempts to salvage the MFA by supplementing it with an excusability principle. He claims that managers may be excused when they cannot uphold their duty, either because of epistemic uncertainty or because of problems posed by the Theorem of Second Best. Here, we respond that Stabell’s excusability principle cannot save the MFA from the overdemandingness objection: when the MFA is overdemanding, agents cannot have an obligation to act upon its recommendations. However, if there is no obligation, there is no need for an excuse.