Explaining Social Order and Norms of Cooperation: Nested Hierarchies

Existing formal models of social order have difficulty providing convincing accounts of stable cooperation within societies because they do not analyze the full range of institutional forms that are available for large collectivities. This paper presents a new model of cooperation within societies, based upon a nested hierarchies of groups. The problem of maintaining cooperation is viewed as isomorphic at each level, with successful enforcement of cooperation at one level allowing a group to be treated as unitary entity at the next. This allows for comparison of the efficiency of a wide range of institutional structures within a fairly simple model. Finally, the effect of particularistic factors (in the form of member dependence) on the costs of maintaining cooperation within groups is analyzed, as are its effects on optimal institutional structure. A recent revival of interest in the problem of order has been enriched by rational choice models that focus on management of cooperation within groups, societies and the international arena. The literature on decentralized ("anarchic") cooperation, in which all members of society are responsible for enforcing prescribed actions upon one another, has now become a genre unto itself, and hence needs little introduction. 1 This literature, however, has been complemented but a smaller and growing body of work that discusses centralized monitoring and/or enforcement, in which a specialized agent is responsible for enforcement, as an alternative institution for cooperation. (Bendor and Mookherjee 1987, Bianco and Bates 1988, Hardin 1991, Milgrom, North and Weingast 1990, Mookherjee and Png 1992, Calvert 1994). It towards this latter literature that this paper is addressed. Unlike most preceding work, however, this paper will be less concerned with comparing the dynamics of centralized vs. decentralized cooperation than with modeling the costs and conditions for sustainability associated with different types of centralized and semi-centralized (i.e. federalized) institutions. The reason for this is that, given reasonable assumptions about the problem of monitoring, decentralized cooperation can be shown to be unsustainable in groups of sufficiently large size (Hechter 1987, 1993; Bendor and Mookherjee 1987, Hardin 1982, Taylor 1982, Olson 1971). This makes decentralized cooperation an implausible option for entire societies, as is clear from examining reality. Hence centralized or semi-centralized enforcement can be seen as as the only plausible institutions for cooperation within large-scale social entities. Understanding how such mechanisms work is a key to analyzing the problem of social order, as well as the role of the state and civil society in maintaining it. 2 One major portion of the paper will be devoted to examining the costs of different institutions of hierarchical, federalized nested control within a large collectivity. Such institutions will be made up of a central authority (such as a state) that maintains