SELF-COMMAND IN SMITH,ADAM THEORY-OF-MORAL-SENTIMENTS - A GAME-THEORETIC REINTERPRETATION

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 endoge nous quality or reputation models. While acknowledging Smith's views o n the evolutive nature of the general rules of morality (as well as th e individual's understanding of them), we take the general rules as gi ven. Within the game's framework we show how self-command can be attai ned in equilibrium solely due to the 'internal reputation effect' aris ing from one's self-interested behavior. Our game-theoretic reinterpre tation of TMS sheds new light on the acquisition of self-command and f asts Smith as a sophisticated early theorist: he had already dealt wit h the issue of reputational enforcement, and wrestled with the same te nsion that has led to the eductive and evolutive approaches to non-coo perative game theory.