Was Adam Smith Wrong? Mutual Sympathy and A Beautiful Mind

game theory mutual sympathy john nash a beautiful mind

Marko Veckov for AdamSmithWorks

A careful reading of Adam Smith will show that Smith and Nash may be closer than this scene suggests if we look at this problem from Smith’s point of view.
Movie lovers are certainly familiar with A Beautiful Mind, the 2001 blockbuster film starring Russell Crowe, Jennifer Connelly, and Ed Harris. It is a great portrait of the life and work of mathematician and Nobel laureate John Nash, perhaps most famous in economics for the eponymous Nash Equilibrium in game theory. There is at least one part of the film where the protagonist’s situation is of interest to Adam Smith fans. 

In that scene, Nash sits in a café surrounded by his university friends when five young women enter the place. One of them, possibly the most attractive one, notices John (played by Crowe) to the surprise of his friends, who always looked at him as somehow odd and clumsy when it comes to contact with the opposite sex. That is when he has a moment of revelation and where he “corrects” Adam Smith’s famous notion that individual ambition serves the common good. Nash notes that it is not sufficient for the individual to do what is best for only for himself, but also what is good for others- in this case, four of his friends. He observes:
If we all go for the blonde and block each other, not a single one of us is going to get her. So then we go for her friends, but they will all give us the cold shoulder because no on likes to be second choice. But what if none of us goes for the blonde? We won't get in each other's way and we won't insult the other girls. It's the only way to win.

A careful reading of Adam Smith will show that Smith and Nash may be closer than this scene suggests if we look at this problem from Smith’s point of view. Smith believed that in any economic or social interaction, an individual following his or her own interest works seeks the best outcome for him/herself, and at the same time also fosters the best outcome for others. In the interactions between buyers and sellers, the interests of both are their primary focus, and by following them,  the best outcomes of individual exchanges will also encourage the best overall outcome for society.

In the social interaction presented in the film, by going for the blonde, John would leave space for his buddies to meet her friends. There is of course the problem of all five of them going for the blonde. Smith points out that whenever there is some form of mutual sympathy between people (in this case, there was a mutual sympathy between John and the blonde woman), any coercion, whether coming from other individuals or the state, should not happen. Of course, that his friends should have the freedom to approach the blonde, as well, but since she had already made her choice, their effort is in vain.

It is as if there was a competition between five of them for the sympathy of only one female, and John came out as the winner. It might be argued that by going for the blonde  and doing what is best for himself, he does the best for the whole group, as he leaves the space for them to meet her friends and not to block each other. As each friend likely has mutual sympathy with his fellows, this situation is most unlike the anonymous exchanges in game theoretical models. All in all, we can still see that self-interest is not just self-rewarding, but also beneficial to the other side, as well as to a broader community, whether economic or social.

Want to learn more?
Rubenstein on Game Theory and Behavioral Economics, an EconTalk podcast
Vernon Smith, Adam Smith: Scientist and Evolutionist at AdamSmithWorks
Liya Palagashvili, Love and Economics at Econlib