The Two Faces of Adam Smith

  title={The Two Faces of Adam Smith},
  author={Vernon L. Smith},
  journal={Southern Economic Journal},
  • V. Smith
  • Published 1 July 1998
  • Economics
  • Southern Economic Journal
Adam Smith’s two major works are based on apparently contradictory themes in human nature: noncooperative self-interest and other-regarding sympathy. These views are not contradictory if we distinguish impersonal market exchange and personal exchange. Noncooperative behavior in the former maximizes the gains from exchange, the basis of specialization and wealth creation. Cooperative behavior in personal exchange is based on reciprocity—trading gifts, favors, and assistance across time—which… 

Figures from this paper

The same face of the two Smiths: Adam Smith and Vernon Smith
The Same Face of the Two Smith
In 1998 Vernon Smith courageously introduced The Theory of Moral Sentiments (TMS)—the " other " book of Adam Smith—into the experimental literature. Vernon Smith used TMS to help explain some
Reciprocity in Smith
This paper aims at providing a reconstruction of a general theory of reciprocity from Smith’s works which provides both a descriptive and a normative account of reciprocity, and explains reciprocal
Social Cooperation and the Apparent Tension between Personal and Impersonal Exchange
Experimental research provides evidence for both agents as noncooperatively self-interested and cooperatively other-regarding. Drawing on the work of F.A. Hayek, Vernon Smith attempts to resolve this
Sic et Non: Three Remarks of Adam Smith to Economics of Governance
The work of Adam Smith is often interpreted as a justification of the natural order of economy, an apology which harmonizes individual and public interests. In addition to the concern for the
Adam Smith, Behavioral Economist
In The Wealth of Nations, published in 1776, Adam Smith famously argued that economic behavior was motivated by self-interest. But 17 years earlier in 1759, Smith had proposed a theory of human
A Discipline Without Sympathy: The Happiness of the Majority and its Demise
Experimental economists frequently invoke Adam Smith's notion of sympathy, and experimental treatments typically examine sympathy in situations where two groups are involved. We explore additional
Economics and novels: good, evil and becoming better people
Abstract This paper considers differences in how economists and novelists view the importance of good and evil in determining social outcomes. As opposed to novelists, economists see the possibility
Moral markets
Is market exchange solely dependent on selfishness or does other-regarding behavior play any substantial role? This article reviews the philosophical, psychological and neurological basis for moral
Abstract “Das Adam Smith Problem” is the name given by eighteenth-century German scholars to the question of how to reconcile the role of self-interest in the Wealth of Nations with Smith’s advocacy


Fairness and the Assumptions of Economics
The advantages and disadvantages of expanding the standard economic model by more realistic behavioral assumptions have received much attention. The issue raised in this article is whether it is
Social distance and other-regarding behavior in dictator games
A surprisingly large amount of otherregarding behavior is the common finding of experiments on bargaining, public goods, and trust. Elizabeth Hoffman et al. ( hereafter, HMS ) ( 1996 ) have provided
Entitlements, Rights, and Fairness: An Experimental Examination of Subjects' Concepts of Distributive Justice
THE research reported in this paper arose from a previous experimental study conducted by the authors.' That study involved bargains struck between two subjects who had opposing payoff functions and
Trust Reciprocity and Interpersonal History: Fool Me Once Shame on You Fool Me Twice Shame on Me
In the investment game subjects in room A decide how much of their $10 show up fee to invest with an anonymous counterpart in room B. Each dollar is known to triple by the time it reached room B.
The Evolution of Reciprocal Altruism
  • R. Trivers
  • Psychology
    The Quarterly Review of Biology
  • 1971
A model is presented to account for the natural selection of what is termed reciprocally altruistic behavior. The model shows how selection can operate against the cheater (non-reciprocator) in the
Reciprocity, Trust, and Payoff Privacy in Extensive Form Bargaining
Abstract We report decision making in two-person extensive form game trees, using six treatments that vary matching protocol, payoffs, and payoff information. Our objective is to examine game
Fairness in Simple Bargaining Experiments
Abstract We present an experiment to test whether fairness alone can explain proposers′ willingness to make nontrivial offers in simple bargaining games. We examine two treatments: game (ultimatum or
Game theory and reciprocity in some extensive form experimental games.
We examine decision making in two-person extensive form game trees using nine treatments that vary matching protocol, payoffs, and payoff information. Our objective is to establish replicable
The Social Function of Intellect
Henry Ford, it is said, commissioned a survey of the car scrap yards of America to find out if there were parts of the Model T Ford which never failed. I lis inspectors came back with reports of
Genetics and the Social Behavior of the Dog
  • F. P. Gault
  • Medicine
    The Yale Journal of Biology and Medicine
  • 1965
second half of the book presents the information that the authors were able to gather with the assistance of two public health teams supported by the Greek Ministry of Health in relation to medical