Final thoughts on Adam Smith and the psychology of probability

I began this series of blog posts on 22 August by asking whether Adam Smith was a closet Bayesian. Today, I draw this series to a close by concluding that Adam Smith was a closet behavioral economist who made several significant contributions to what I like to call the “psychology of probability”. Although Smith’s insights are non-mathematical in nature, they are nevertheless important and original: LOTTERY METAPHOR To begin, Adam Smith can be considered the first out of a long line of future Anglo-American philosophers — Rawls 1971, Williams 1981, Taleb 2001, Hawthorne 2004, Binmore 2005, and Stone 2011, just to name a few — who have explored how chance applies to various domains of our lives! On this note, see my posts “Adam Smith’s allegory: the lottery of life” and “Adam Smith on self-deception“. THE “WHO DECIDES?” QUESTION Adam Smith not only recognizes the role that chance/probability can play in some aspects of life; he also highlights (in passing) the importance of what I like…