Group Size, Heterogeneity, and Prosocial Behavior: Designing Legal Structures to Facilitate Cooperation in a Diverse Society

Abstract:     
Recent social science research has found that in many scenarios, increases in group size and diversity have a negative impact on cooperation and other prosocial behavior. A related study by the political scientist Robert Putnam has created a firestorm of debate within the past few months about the negative effects of diversity on the social fabric.

This essay addresses a subset of this larger debate. It looks to recent social science research to explore how and why group size and diversity impact cooperation and other prosocial behaviors. It then considers how to take the results of this research into account in designing legal structures, either by placing people into contexts that foster cooperation or by taking affirmative steps to mitigate the negative impacts of increases in group size or diversity. Increases of group size and diversity tend to undercut the informal mechanisms that communities use to encourage cooperation, and in many circumstances these mechanisms can be replaced by legal structures. To illustrate the potential for using the design of legal structures to encourage prosocial behavior, the essay draws on examples including residential community organizations, the management of natural resources, corporate boards, and the private microlending groups organized by the Nobel-Peace-Prize-winning Grameen Bank.

Keywords: Putnam, group size, heterogeneity, diversity, common interest community, residence, corporate board, corporate governance, Grameen, microlending, natural resources, cooperation, prosocial behavior, helping

JEL Classifications: D64, D71, H41, K11, K22, Q20, O13, O17

Accepted Paper Series