Self-Command in Adam Smith's Theory of Moral Sentiments

Abstract

Building on an analysis of Adam Smith's enumeration of five classes of passions, we show that self-command in his Theory of Moral Sentiments (TMS) can be modeled as a game whose structure is identical to endogenous quality or reputation models. While acknowledging Smith's views on the evolutive nature of the general rules of morality (as well as the individual's understanding of them), we take the general rules as given. Within the game's framework we show how self-command can be attained in equilibrium solely due to the `internal reputation effect' arising from one's self-interested behavior. Our game-theoretic reinterpretation of TMS sheds new light on the acquisition of self-command and casts Smith as a sophisticated early theorist: he had already dealt with the issue of reputational enforcement, and wrestled with the same tension that has led to the eductive and evolutive approaches to non-cooperative game theory.

Viewpoint: On the generalizability of lab behaviour to the field

“…5 In practice, many factors influence the moral costs associated with an action, but for modelling purposes, we focus on just three aspects of the moral determinant: the financial externality that an action imposes on others, v, the set of social norms or legal rules that govern behaviour in a particular society, n, and the effect of scrutiny, s. makes' (Grampp 1948, 317, as cited in Ashraf, Camerer, andLoewenstein 2005). For further discussion on this issue see Meardon and Ortmann (1996), Palacios-Huerta (2003), and Ashraf et al (2005). Becker (1974) introduced altruism as an explanation for why individuals give (or cooperate) when it is money maximizing not to give (or cooperate).…”

“…4 4 Smith viewed decisions as a struggle between ‘passions’ and an ‘impartial spectator,’ who was a ‘moral hector who, looking over the shoulder of the economic man, scrutinizes every move he makes’ (Grampp 1948, 317, as cited in Ashraf, Camerer, and Loewenstein 2005). For further discussion on this issue see Meardon and Ortmann (1996), Palacios‐Huerta (2003), and Ashraf et al (2005). Becker (1974) introduced altruism as an explanation for why individuals give (or cooperate) when it is money maximizing not to give (or cooperate).…”

David F. Hardwick and Leslie Marsh, eds., Propriety and Prosperity: New Studies on the Philosophy of Adam Smith (Basingstoke: Palgrave Macmillian, 2014), pp. xviii + 283, $115 (hardcover). ISBN: 9781137321681.

“…Thus, the book deepens a process of inquiry already initiated by stephen J. Meardon and Andreas ortmann (1996), David M. Levy (1999), ignacio Palacios-Huerta (2003), and Laurie Bréban (2012).…”

Sensitivity to prosperity and adversity: What would a Smithian function of happiness look like?

“…In this context, an individual's preferences are expressed through his discount rate, rather than they depend on on his initial endowment. For two different ways of interpreting the deliberation that leads to selfcommand in the Theory of Moral Sentiments, see Meardon and Ortmann (1996) and Bréban (2007: 80-97). 25 This conclusion might be extended to an adaptation-level theory interpretation of Smith.…”