An unresolved controversy regarding social behaviors is exemplified when natural selection might lead to behaviors that maximize fitness at the social-group level but are costly at the individual level. Except for the special case of groups of clones, we do not have a general understanding of how and when group-optimal behaviors evolve, especially when the behaviors in question are flexible. To address this question, we develop a general model that integrates behavioral plasticity in social interactions with the action of natural selection in structured populations. We find that group-optimal behaviors can evolve, even without clonal groups, if individuals exhibit appropriate behavioral responses to each other’s actions. The evolution of such behavioral responses, in turn, is predicated on the nature of the proximate behavioral mechanisms. We model a particular class of proximate mechanisms, prosocial preferences, and find that such preferences evolve to sustain maximum group benefit under certain levels of relatedness and certain ecological conditions. Thus, our model demonstrates the fundamental interplay between behavioral responses and relatedness in determining the course of social evolution. We also highlight the crucial role of proximate mechanisms such as prosocial preferences in the evolution of behavioral responses and in facilitating evolutionary transitions in individuality.