| Sumario: | Adam Smith's two main works, Wealth of Nations and The Theory of Moral Sentiments, are based on seemingly contradictory themes in human nature, noncooperative self-interest and other-regarding sympathy, but these views are not contradictory if impersonal market exchange and personal exchange are distinguished. Noncooperative behavior in the impersonal market exchange maximizes the gains from an exchange, the basis of specialization and wealth creation, and cooperative behavior in personal exchange is based on reciprocity—trading gifts, favors, and help across time—which maximizes the gains from social exchange. That persons can be both cooperative and noncooperative is corroborated in laboratory experiments and is postulated to come from a self-interested propensity for exchange in markets and friendships.
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