Formación y capacitación

There’s an additional subtle point about all this that’s essential for understanding the relationship between Smith’s ideas and modern notions of human nature and game theory. The cartoon view of Smith’s story is that human nature is selfish, and that economic behavior is rooted in that “truth.” And game theory seems to incor- porate that belief. In its original form, game theory math describes “rational” behavior in a way that essentially synonymizes “rational” with “selfish.” But as it is interpreted today, game theory does not actually assume that people always behave selfishly—or rationally. Game theory tells you what will happen if people do behave self- ishly and rationally.

Besides, Adam Smith did not believe that humans are univer- sally selfish (and he was right, as game theory experiments have recently rediscovered). In fact, Smith glimpsed many findings of

today’s experimental economic science. Modern commentators of- ten don’t realize that, though, because they neglect to consider that Wealth of Nations was not Smith’s only book.

When writing Wealth of Nations, Smith assumed (as do all au- thors) that its readers would have also read his first book: the Theory of Moral Sentiments, published in 1759. So he did not think it nec- essary to revisit the much different picture of human nature he had previously presented. Read together, Smith’s two books show that he had a kinder and gentler view of human nature than today’s economics textbooks indicate.

This point was made to me by Colin Camerer, whose research is at the forefront of understanding the connections between game theory and human behavior. Camerer’s specialty, “behavioral game theory,” is a subdivision of the field generally described as “behavioral economics.” By the 1980s, when game theory began to infiltrate the economics mainstream, various economists had be- come disenchanted with the old notion, descended with mutations from Adam Smith, that humans were merely rational actors pursu- ing profits. Some even hit on the bright idea of testing economic theory by doing experiments, with actual people (and sometimes even real money). Not surprisingly, experiments showed that people often act “irrationally”—that is, their choices do not always maxi- mize their profits. Pursuing such experiments led to some Nobel prizes and some new insights into the mathematics underlying eco- nomic activity.

Game theory played a central role in those developments, as it quantified the profit maximization, or “utility,” that people in ex- periments were supposed to be pursuing. In a complicated experi- ment, it’s not always obvious what the utility-maximizing strategy really is. Game theory can tell you. In any event, Camerer finds it fascinating that game theory shows, in so many ways, that humans defy traditional economic ideas. But those experimental results, he told me, don’t really defy Adam Smith.

During one of our conversations, at a coffee shop on the Caltech campus, Camerer stressed that Smith never contended that

all people are inherently selfish, out for themselves with no con- cern for anyone else. Smith merely pointed out that even if people operated totally out of selfishness, the economic system could still function efficiently for the good of all. “The idea was, if people want to make a lot of dough, the way to do it is by giving you what you want, and they don’t care about you per se. And that doesn’t logically imply that people don’t care about others; it just means that even if they didn’t, you could have an effective capital- ist economy and produce what people most want,” Camerer said. “I think Adam Smith has been kind of misread. People say, ‘Gee, Adam Smith proved that people don’t care about each other.’ What he conjectured, and later was proved mathematically, was that even if people didn’t care about each other, markets could do a pretty good job of producing the right goods. But logically that doesn’t imply that people don’t care.”14 _{So human nature is not necessarily} as adamantly self-serving as some people would like to believe. Some people are selfish, of course, but others are not.

In fact, in Smith’s treatise on moral sentiments, he identified sympathy as one of the most important of human feelings. And he described the conflict between the person’s “impartial spectator”— a sort of long-term planner or “conscience”—and the passions, including hunger, fear, anger, and other drives and emotions. The brain’s impartial spectator weighs the costs and consequences of actions, encouraging rational choices that should control the reac- tions of the passions. While economists have traditionally assumed that people make rational economic choices, Smith knew that in real life the passions often prevailed. “Smith recognized . . . that the impartial spectator could be led astray or rendered impotent by sufficiently intense passions,” Camerer and two colleagues wrote in a 2005 paper.15

Nevertheless, the notion of self-interest and utility was drama- tized by Smith in such a way that it formed a central core of subsequent economic philosophy. And not only economics was shaped by Smith’s ideas. His books also contributed in a significant way to the birth of modern biology.