There's a real biological basis for our reluctance to engage with large groups. Dunbar pins the number at 150 and claims its limited by our brain's computational capacity. Below 150, humans seem to comfortable monitoring our relationship with everyone and able to keep trust high amongst the complexity of interrelationships. Above 150, we start "losing track" and no longer feel a tight connection to the group. More importantly, above this threshold and no one person can police for defectors or bad behavior. Individuals who don't share the same values can hide out in the group and take advantage of it. Once that trust becomes harder to establish, the group dynamic changes and game theory kicks in.

https://www.sciencedirect.com/science/article/abs/pii/004724...