Social Exchange Theory
Social Exchange Theory is a social psychological and sociological perspective that explains social change and stability as a process of negotiated exchanges between parties. Social Exchange Theory posits that all human relationships are formed by the use of a subjective cost-benefit analysis and the comparison of alternatives. The theory has roots in economics, psychology and sociology. Social Exchange Theory features many of the main assumptions found in rational choice theory and structuralism.
Social Exchange Theory was introduced in the 1960s by George Homans. After Homans founded the theory, many theorists such as Richard Emerson,John Thibaut, Harold Kelley and Peter Blau continued to write about the theory. John Thibaut and Harold Kelly focused their studies within the theory on the psychological concepts, the dyad and small group. Homans's primary concern within this field was focusing on the behavior of individuals when interacting with one another. He believed characteristics such as power, conformity, status, leadership and justice within social behavior was important to explain within the theory. Although there are various modes of exchange, Homans focused his studies on dyadic exchange.
Homans summarizes the system in three propositions Success, Stimulus, Deprivation-Satiation Proposition.
- 1. Success Proposition: When one finds they are rewarded for their actions, they tend to repeat the action.
- 2. Stimulus Proposition: The more often a particular stimulus has resulted in a reward in the past, the more likely it is that a person will respond to it.
- 3. Deprivation-Satiation Proposition: The more often in the recent past a person has received a particular reward, the less valuable any further unit of that reward becomes.
Peter Blau focused his early writings on Social Exchange Theory more towards the economic and utilitarian perspective. Whereas Homans focused on reinforcement principles which believe individual's base their next social move on past experiences, Blau's utilitarian focus encouraged the theorist to look forward as in what they anticipated the reward would be in regards to their next social interaction. Blau felt that if individuals focused too much on the psychological concepts within the theory, they would refrain from learning the developing aspects of social exchange. Blau emphasized technical economic analysis whereas Homans concentrated more on the psychology of instrumental behavior.
Richard Emerson's early work on the theory intertwined with both Homans and Blau's ideas. From Homan's ideas, he believed Social Exchange Theory was based on reinforcement principles. According to Emerson, Exchange is not a theory but a framework of from which other theories can converge and compared to structural functionalism. Emerson's perspective was similar to Blau's since they both focused on the relationship power had with the exchange process. Emerson says that Social Exchange Theory is an approach in sociology that is described for simplicity as an economic analysis of noneconomic social situations. Exchange theory brings a quasi-economic more of analysis into those situations.
Basic concepts 
Costs are the elements of relational life that have negative value to a person, such as the effort put into a relationship and the negatives of a partner. (Costs can be time, money, effort etc.)
Rewards are the elements of a relationship that have positive value. (Rewards can be sense of acceptance, support, and companionship etc.)
The Social Exchange perspective argues that people calculate the overall worth of a particular relationship by subtracting its costs from the rewards it provides.
- Worth = Rewards – Costs
If worth is a positive number, it is positive relationship. On the contrary, negative number indicates a negative relationship. The worth of a relationship influences its outcome, or whether people will continue with a relationship or terminate it. Positive relationships are expected to endure, whereas negative relationships will probably terminate.
The Social Exchange Theory explains social exchange and stability as a process of negotiated exchanges between parties.Social Exchange Theory explores the nature of exchanges between parties. As with everything dealing with the Social Exchange Theory it has it’s outcome satisfaction and dependence of relationships. Both parties in a social exchange take responsibility for one another and depend on each other. According to Laura Stafford (2008), economic exchanges and social exchanges have some differences: Social exchanges involve a connection with another person; social exchanges involve trust, not legal obligations; social exchanges are more flexible; and social exchanges rarely involve explicit bargaining.
"The guiding force of interpersonal relationships is the advancement of both parties’ self-interest" — Michael Roloff (1981) Interpersonal exchanges are thought to be analogous to economic exchanges where people are satisfied when they receive a fair return for their expenditures. Fulfilling self-interest is often common within the economic realm of the Social Exchange Theory where competition and greed can be common.
- Outcome = Rewards – Costs
George Homan developed five key propositions that assist in structuring individual's behaviors based on rewards and costs. The first proposition, the Success Proposition states that behavior that creates positive outcomes is likely to be repeated. The second proposition, the Stimulus Proposition believes that behavior if an individual's behavior is rewarded in the past, the individual will continue the previous behavior. The third proposition, the Value proposition believes that if the result of a behavioral action is considered valuable to the individual, it is more likely for that behavior to occur. The fourth proposition, the Deprivation-satiation proposition believes that if an individual has received the same reward several times, the value of that reward will diminish. Lastly the fifth proposition, discusses when emotions occur due to different reward situations.
12 Theoretical Propositions 
Ivan Nye came up with twelve theoretical propositions that aid in understanding the exchange theory.
- Individuals choose those alternatives from which they expect the most profit.
- Cost being equal, they choose alternatives from which they anticipate the greatest rewards.
- Rewards being equal, they choose alternatives from which they anticipate the fewest costs.
- Immediate outcomes being equal, they choose those alternatives that promise better long- term outcomes.
- Long-term outcomes being perceived as equal, they choose alternatives providing better immediate outcomes.
- Costs and other rewards being equal, individuals choose the alternatives that supply or can be expected to supply the most social approval (or those that promise the least social disapproval).
- Costs and other rewards being equal, individuals choose statuses and relationships that provide the most autonomy.
- Other rewards and costs equal, individuals choose alternatives characterized by the least ambiguity in terms of expected future events and outcomes.
- Other costs and rewards equal, they choose alternatives that offer the most security for them.
- Other rewards and costs equal, they choose to associate with, marry, and form other relationships with those whose values and opinions generally are in agreement with their own and reject or avoid those with whom they chronically disagree.
- Other rewards and costs equal, they are more likely to associate with, marry, and form other relationships with their equals, than those above or below them. (Equality here is viewed as the sum of abilities, performances, characteristics, and statuses that determine one's desirability in the social marketplace.)
- In industrial societies, other costs and rewards equal, individuals choose alternatives that promise the greatest financial gains for the least financial expenditures.
The assumptions that SET makes about human nature include the following:
- Humans seek rewards and avoid punishments.
- Humans are rational beings.
- The standards that humans use to evaluate costs and rewards vary over time and from person to person.
The assumptions SET makes about the nature of relationships include the following:
- Relationships are interdependent.
- Relational life is a process.
The prisoner's dilemma is a widely used example in game theory that attempts to illustrate why or how two individuals may not cooperate with each other, even if it is in their best interest to do so. It demonstrates that while cooperation would give the best outcome, people might nevertheless act selfishly.
Social Exchange Theory is a theoretical explanation for organizational citizenship behavior. This study examines a model of clear leadership and relational building between head and teachers as antecedents, and organizational citizenship behavior as a consequence of teacher–school exchange. All relationships involve exchanges although the balance of this exchange is not always equal. We cannot achieve our goals alone so as humans we have to sometimes become actors. In the world today we see actors as unemotional people but that is not the case once we reach our goals in the end.
Comparison Levels and Modes of Exchange 
Social exchange includes "both a notion of a relationship, and some notion of a shared obligation in which both parties perceive responsibilities to each other" Evaluation rests on two types of comparisons: Comparison Level and Comparison Level for Alternative. The Comparison Level (CL) is a standard representing what people feel they should receive in the way of rewards and costs from a particular relationship. (Thiabaut and Kelly) An individual's comparison level can be considered the standard by which an outcome seems to satisfy the individual. Comparison levels can be based on previous experiences. The Comparison Level for Alternative (CLalt) refers to “the lowest level of relational rewards a person is willing to accept given available rewards from alternative relationships or being alone” In other words, when using this evaluation tool an individual will consider other alternative payoffs or rewards outside of the current relationship or exchange.
According to Kelly and Thibaut, people engage in Behavioral Sequence, or a series of actions designed to achieve their goal. When people engage in these behavioral sequences they are dependent to some extent on their relational partner. In order for behavioral sequences to lead to social exchange, two conditions must be achieved: "It must be oriented towards ends that can only be achieved through interaction with other persons, and it must seek to adapt means to further the achievement of these ends". Power is an essential theme within Social Exchange Theory. Power can be exemplified within the theory during an unreciprocated exchanges. Power differentiation effects social structures by causing inequalities between members of different groups, such as an individual having superiority over another. Power within the theory is governed by two variables : the structure of power in exchange networks and strategic use. Two examples of power are fate control and behavior control. Fate control is the ability to affect a partner’s outcomes. Behavior control is the power to cause another’s behavior to change by changing one’s own behavior. Power is viewed differently within the theory, some theorists view power as distinct from exchanges, some view it as a kind of exchange and others believe power is a medium of exchange.
People develop patterns of exchange to cope with power differentials and to deal with the costs associated with exercising power. These patterns describe behavioral rules or norms that indicate how people trade resources in an attempt to maximize rewards and minimize costs. Three different matrices have been described by Thibaut and Kelly to illustrate the patterns people develop. These are given matrix, the effective matrix and the dispositional matrix.
- The given matrix represents the behavioral choices and outcomes that are determined by a combination of external factors (environment) and internal factors(the specific skills each interactant possesses).
- The effective matrix “which represents an expansion of alternative behaviors and/or outcomes which ultimately determines the behavioral choices in social exchange”
- The dispositional matrix represents the way two people believe that rewards ought to be exchanged between them.
There are three forms within these matrices: Reciprocity, Generalized Exchange, and Productive Exchange. In a direct exchange, reciprocation is confined to the two actors. One social actor provides value to another one and the other reciprocates. There are three different types of reciprocity:
- Reciprocity as a transactional pattern of interdependent exchanges
- Reciprocity as a folk belief
- Reciprocity as a moral norm
A generalized exchange involves indirect reciprocity between three or more individuals. For example,one person gives to another and the recipient responds by giving to another person other than the first person. Productive exchange means that both actors have to contribute for either one of them to benefit. Both people incur benefits and costs simultaneously.
Another common form of exchange is negotiated exchange which focuses on the negotiation of rules in order for both parties to reach a beneficial agreement. Reciprocal exchanges and negotiated exchanges are often analyzed and compared to discover their essential differences. One major difference between the two exchanges is the level of risks associated with the exchange and the uncertainty these risks create (ref). Negotiated exchange can consist of binding and non-binding negotiations. When comparing the levels of risk within these exchanges, reciprocal exchange has the highest level of risk which in result produces the most uncertainty. An example of a risk that could occur during the reciprocal exchange is the factor that the second party could end up not returning the favor and completing the reciprocal exchange.Binding negotiated exchanges involve the least amount of risks which will result the individuals feeling low levels of uncertainty . Whereas non-binding negotiated exchanges and their level of risks and uncertainty fall in between the amount of risks associated with reciprocal and binding negotiated exchanges <r. Since there is not a binding agreement involved, one party involved in the exchange could decide to not cooperate with the agreement.
Katherine Miller outlines several major objections to or problems with the social exchange theory as developed from early seminal works
- The theory reduces human interaction to a purely rational process that arises from economic theory.
- The theory favors openness as it was developed in the 1970s when ideas of freedom and openness were preferred, but there may be times when openness isn’t the best option in a relationship.
- The theory assumes that the ultimate goal of a relationship is intimacy when this might not always be the case.
- The theory places relationships in a linear structure, when some relationships might skip steps or go backwards in terms of intimacy.
It also is strongly seated in an individualist mindset, which may limit its application in and description of collectivist cultures.
Russell Cropanzano and Marie S. Mitchell discuss how one of the major issues within the social exchange theory is the lack of information within studies on the various exchange rules. Reciprocity is a major exchange rule discussed but Cropanzano and Mitchell write that the theory would be better understood if more research programs discussed a variety of exchange rules such as altruism, group gain, status consistency and competition.
||This section needs additional citations for verification. (June 2010)|
Currently, Social Exchange Theory materializes in many different situations with the same idea of the exchange of resources. Homans once summarized the theory by stating:
- Social behavior is an exchange of goods, material goods but also non-material ones, such as the symbols of approval or prestige. Persons that give much to others try to get much from them, and persons that get much from others are under pressure to give much to them. This process of influence tends to work out at equilibrium to a balance in the exchanges. For a person in an exchange, what he gives may be a cost to him, just as what he gets may be a reward, and his behavior changes less as the difference of the two, profit, tends to a maximum ("Theories Used in Research").
We use the social exchange theory in our everyday life too see why choose to end or continue relationships. Self-Interest can encourage individuals to make decisions that will benefit themselves overall.
Emotion enters the theory when we finally feel the joy from the reward. We feel the sense of completion and accomplished. We also feel good, satisfied, relieved, excited. Throughout this process we can create bonds. By this I mean we see each other as beneficial to each other and that makes for relationships in the end.
Throughout the theory we also end up losing relationships that we had because we feel they are no longer beneficial to us in any way. We feel like there is no longer any point of having any type of communication because there aren’t any rewards anymore. Once this happen we look for new partners and resources so we can continue our networking. We always go through this process on a day to day basis.
This theory can be applied to various social settings such as intimate relationships or work settings. A study titled, Factors Related to Initiating Interpersonal Contacts on Internet Dating Sites: A View From the Social Exchange Theory applied this theory to new media (online dating). The study discovers the different factors involved when an individual decides to establish an online relationship. Overall the study followed the Social Exchange Theory's idea, "people are attracted to those who grant them rewards".
See also 
- Social interaction
- Social action
- Complexity science
- Economic network
- Equity theory
- Rational agent
- Open innovation
- Predicted outcome value theory
- Social good
- Social networks
- Value (economics)
- Value conversion
- Value network
- Value network analysis
- Vulnerability and Care Theory of Love
- Emerson, Richard M. (1976). "Social Exchange Theory". Annual Review of Sociology 2. PMID 335-362.
- Cook, Karen S., and Eric Rice."Social Exchange Theory."The Handbook of Social Psychology. Kluwer Academic/Plenum, p. 54
- Emerson, Richard (1976). "Social Exchange Theory". Annual Review of Sociology 2: 335–362.
- West, Richard; Turner, Lynn (2007). Introducing Communication Theory. McGraw Hill. pp. 186–187.
- P.R., Monge; N., Contractor (2003). Theories of communication networks. Oxford University Press.
- Stafford, Laura (2008). Social Exchange theories. In L.A. Baxter & D.O. Braithwaite (Eds.), Engaging theories in interpersonal communication:Multiple perspetives(pp.377-389). Thousand Oaks.
- Roloff, Michael (1981). Interpersonal communication； The social exchange approach. Beverly Hills.
- McDonell, J.Strom-Gottfriend, KJ., Burton, D.L., & Yaffe, J. "Behavorism, Social Learning, and Exchange Theory." Contemporary Human Behavior Theory: A Critical Perspective for Social Work. (2006) Pearson, 349-85.
- Cook, Karen S.; Eric Rice. "Social Exchange Theory". The Handbook of Social Psychology.
- West, Richard; Turner, Lynn (2007). Introducing Communication Theory. McGraw Hill. p. 188.
- Thibaut, N.; Kelley, H. (1959). The social psychology of groups. New York Wiley.
- Elstad, Eyvind; Christopheresen, Knut Andreas; Turmo, Are (2011). "Social Exchange Theory as an Explanation of Organizational Citizenship Behaviour Among Teachers". International Journal of Leadership in Education: Theory and Practice 14 (4). doi:10.1080/13603124.2010.524250.
- Lavelle, Rupp; Brockner, J. (2007). Taking a multifoci approach to the study of justice, social exchange, and citizenship behavior:The target similarity model. Journal of Management. p. 845.
- Griffin, Em. "A First Look at Communication Theory". McGraw Hill.
- Roloff, Michael (1981). Interpersonal communication； The social exchange approach. Beverly Hills. p. 48.
- West, Richard; Turner, Lynn (2007). Introducing Communication Theory. McGraw Hill. p. 193.
- Blau, Peter M. (1964). Exchange & Power in Social Life. Transaction. ISBN 0887386288, 9780887386282 Check
- Zafirovski, Milan (2005). "Social Exchange Theory Under Scrutiny: A Positive Critique of its Economic-Behaviorist Formulations". Electronic Journal of Sociology.
- Baldwin, David. "Power and Social Exchange". The American Political Science Review 72.
- West, Richard; Turner, Lynn (2007). Introducing Communication Theory. McGraw Hill. p. 194.
- Roloff, Michael (1981). Interpersonal communication； The social exchange approach. Beverly Hills. p. 51.
- West, Richard; Turner, Lynn (2007). Introducing Communication Theory. McGraw Hill. p. 195.
- Cropanzano, Russell; Mitchell, Marie S. za kachvane/Library/razlichni lekcii na angliiski/Social Exchange Theory.pdf Social Exchange Theory: An Interdisciplinary Review.
- Chesire, Coye; Gerbasi, Alexandra; Cook, Karen S. (2010). "Trust and Transitions in Modes of Exchange". American Sociological Association. doi:10.1177/0190272509359616.
- Katherine, Miller (2005). Communication Theories. New York: McGraw Hill.
- Shtatfeld, Rivka; Barak, Azy. "Factors Related to Initiating Interpersonal Contacts on Internet Dating Sites: A View From the Social Exchange Theory".
Further reading 
- Blau, Peter (1964). Exchange and power in social life. New York: Wiley. ISBN 978-0-88738-628-2.
- Befu, Harumi (1977). "Social Exchange". Annual Review of Anthropology 6: 225–281.
- Cook, K. S.; Emerson, R. M. (1978). "Power, Equity and Commitment in Exchange Networks". American Sociological Review 43 (5): 721–739. doi:10.2307/2094546. JSTOR 2094546.
- Ekeh, Peter Palmer. (1974). Social exchange theory : the two traditions. London: Heinemann Educational.
- Settoon, Randall; Bennett, Nathan; Liden, Robert (1996). "Social Exchange in Organizations: Perceived Organizational Support, Leader-Member Exchange, and Employee Reciprocity". Journal of Applied Psycholoy.
- Gouldner, Alvin Ward (1960). "The norm of reciprocity: A preliminary statement". American Sociological Review 25 (2): 161–178. doi:10.2307/2092623. JSTOR 2092623.
- Homans, George C. (1958). "Social Behavior as Exchange". American Journal of Sociology 63 (6): 597–606. doi:10.1086/222355.
- Knapp, Mark L. (1978). Social intercourse: from greeting to goodbye. Allyn and Bacon. ISBN 978-0-205-05961-4.
- Miller, Katherine (2005). Communication Theories. New York: McGraw Hill.
- Miller, Gerald R.; Steinberg, Mark (1975). Between people: A new analysis of interpersonal communication. Science Research Associates. ISBN 0-574-17501-6.
- Murstein, B. I.; Cerreto, M. G.; MacDonald, Marcia G. Mac (1977). "A theory and investigation of the effect of exchange-orientation on marriage and friendship". Journal of Marriage and the Family 39 (3): 543–548. doi:10.2307/350908. JSTOR 350908.
- Thibaut, J. W.; Kelley, H. H. (1959). The social psychology of groups. New York: Wiley. ISBN 978-0-88738-633-6.
- Thomas Bradbury. "Theories of Intimate Relationships, Part 2". AcademicEarth.org.
- Edward J. Lawler. "An Affect Theory of Social Exchange". University of Chicago Press.
- Rivka Shtafeld and Azy Barak. "Factors Related to Initiating Interpersonal Contacts on Internet Dating Sites: A View From the Social Exchange Theory".