I must be dense today, but I don't see the "phantom opportunity cost" connection.

Pareto efficiency is more reachable in game theory, where every agent is a party to every transaction; but not in real life, where you are not a party to, nor even aware of, most transactions that affect you. And a good thing, too; otherwise, we would live in a Pareto-optimal dystopia.

Imagine a world where every decision anyone made was subject to veto by anyone else. That would be a Pareto-optimal society.