Cooperation and identity

Social Macroeconomics working paper
Assar Lindbeck

The paper shows how economic cooperation rests on social cooperation and vice versa. The authors show how social cooperation is generated by prosociality, reciprocity and identity. Their model covers three interrelated domains of behaviour: a psychological domain where people's motives are determined, given the size of the social groups; a social domain where the size of the social groups is determined; and an economic domain where motives of group members and the sizes of these groups shape economic activity.

In this context, the authors explore how people's willingness to make each other better off in economic markets. Furthermore, social cooperation is affected by economic cooperation, since economic rewards contribute to the social rewards from cooperation. Thus economic activity may be understood as the outcome of a reflexive relation between economic and social cooperation. The more fragmented the society is, the less efficient the economy becomes.

About the authors

Dennis Snower, Blavatnik School of Government, University of Oxford

Assar Lindbeck, University of Stockholm