The Logic of Group Behavior
In Business and Elsewhere
Men journey together with a view to particular advantage and by way of providing some
particular thing needed for the purpose of life, and similarly the political association
seems to have come together originally.
. for the sake of the
Unless the number of individuals in a group is quite small, or unless there is coercion, . .
.rational, self-interested individuals will not act to achieve their common or group
In other words, even if all.
. would gain if, as a group, they acted to achieve
their common interest or objective, they will still not voluntarily act to achieve that
common or group interest.
n earlier chapters, we introduced the usefulness of markets.
However, as is evident
inside firms, not all human interactions are through “markets.” People often act
cooperatively in groups or, as the case may be, in “firms.” In this chapter our central
purpose is to explore how and under what conditions people can organize their behavior
into voluntary cooperative associations (groups and firms) in which all work together for
the attainment of some common objective, say, greater environmental cleanliness, the
development of a “club atmosphere,” or the maximization of firm profits.
The focus of
our attention is on the viability of groups like families, cliques, communes, clubs, unions,
and professional associations and societies, as well as firms, in which individual
participation is voluntary to cohere and pursue the common interests of the members.
We consider two dominant and conflicting theories of group behavior.
They are “the
common interest theory” and “the economic theory” of group behavior.
The former is
based on the proposition that a group is an organic whole” identified by the “common
interest” shared by its individual members.
Its basic thesis is that all groups, even very
large ones, are organized to pursue the common interest of the group members.
this theory one step further, it implies that if people share a common interest, they will
organize themselves into a group and voluntarily pursue their shared interest.
According to the economic theory of group behavior, the group is a collection of
independently motivated individuals who organize voluntarily to pursue their common
interest only in small groups, like families or clubs.
In large groups the common interest
The Logic of Collective Action: Public Goods and the Theory of Groups
Mass.: Harvard University Press, 1971), p.