I. Introduction
A. Social Exchange Theory (SET) is based on the notion that people review and weigh their relationships in terms of
costs and rewards.
1. Costs are those elements in the relationship that have negative value to a person
(e.g., stress, time, energy, attention).
2. Rewards are those elements in the relationship that have positive value to a person
(e.g., fun, loyalty, attention).
B. Social exchange theorists argue that all relationships require some time and effort on the part of the parties
involved.
C. A particular factor (e.g., attention) can be considered a reward at one point in the relationship and a cost at another
point.
D. The formula that is used to “calculate” the overall value of a relationship subtracts the costs involved from the
rewards provided.
1. Positive relationships are those whose worth is positive (i.e., rewards exceed costs).
2. Negative relationships are those whose worth is negative (i.e., costs exceed rewards).
E. According to SET, the worth of a relationship predicts its outcome.
1. Positive relationships are continued.
2. Negative relationships will likely be terminated.
F. Sabatelli and Shehan (1993) use the metaphor of a marketplace to describe the social exchange that takes place in
relationships.
G While there have been five different theories identified to explain social exchange in relationships, the authors
base their interpretation on Thibaut and Kelley’s Theory of Interdependence.
II. Assumptions of SET
A. Assumptions about human nature
1. Humans seek rewards and avoid punishments.
a. This notion is consistent with the assumption that people’s behaviors are motivated by some internal drive
mechanism.
b. When people experience the drive, they are motivated to reduce it. This reduction is viewed as being
positive.
2. Humans are rational beings.
a. By using information that is available, individuals tend to calculate the rewards and costs associated with
being in a relationship.
b. The resulting outcome will be used to guide behaviors.
c. If there are no rewarding options available, an individual will select the option that is least costly to him or
her.
3. The standards that humans use to evaluate costs and rewards vary over time and from person to person.
a. The emphasis is on the importance of considering the role of diversity in relationships.
b. What is viewed as a reward by one person may be seen as a cost by another, and
vice versa.
B. Assumptions about the nature of relationships
1. Relationships are interdependent.
a. Thibaut and Kelley adopted a set of principles, called Game Theory, to illustrate the principles of rewards
versus costs.
i. The Prisoner’s Dilemma was developed to illustrate the calculations that are made in determining the
value of relationships.
ii. A 2 ¥ 2 matrix was created to depict the potential choices (confess versus deny) and the outcomes
(freedom versus execution).
b. The game illustrates the fact that the outcome for a relationship is often not completely in the hands of one
individual. Instead, partners co-create the nature and outcome of the relationship.
2. Relational life is a process.
a. Time and change are essential components in relational life.
b. Past experiences in relationships are often used to guide judgments and expectations about rewards and
costs.
c. These judgments will influence future interactions and exchanges.
III. Evaluation of a relationship
A. Individuals evaluate their relationships by deciding whether to continue or terminate the relationship.
B. Thibaut and Kelley identified two types of comparison levels that are used for evaluating relationships.
1. Comparison level (CL) refers to a standard representing what people feel they should receive in the way of
rewards and costs from a particular relationship (e.g., portrayal of relationships in the media, past
experiences).
a. Comparison levels vary due to their subjective nature.
b. A typical yardstick used to measure relationship is one’s own past experiences.
2. Comparison level for alternatives (CLalt) refers to the minimum level of relational rewards that an individual
is willing to accept.
a. A person typically measures this minimum level of what he or she is willing to accept based on two
criteria
i. Rewards that are available from alternative relationships
ii. Rewards that are available from remaining alone
b. CLalt provides a measure of stability in, rather than satisfaction with, a relationship.
c. CLalt is a good way to explain why some people stay in relationships that appear to be somewhat
unrewarding.
3. The relationship between CL, CLalt, and outcome
a. If the outcome is greater than the CL, which is greater than the CLalt, the relationship will be viewed as
being satisfying and stable.
b. If the outcome is greater than the CLalt, which is greater than the CL, the relationship will be viewed as
being satisfying and stable.
c. If the CLalt is greater than the CL, which is greater than the outcome, the relationship will be viewed as
being unsatisfying and unstable.
d. If the CLalt is greater than the outcome, which is greater than the CL, the relationship will be viewed as
being satisfying and unstable.
e. If the CL is greater than the CLalt, which is greater than the outcome, the relationship will be viewed as
being unsatisfying and unstable.
f. If the CL is greater than the outcome, which is greater than the CLalt, the relationship will be viewed as
being unsatisfying and unstable.
IV. Exchange patterns
A. In addition to explaining how people calculate the outcomes of their relationship, Thibaut and Kelley examined
how people adjusted their behaviors in a relationship.
B. Their examination is based on the assumption that people are driven to achieve goals in their interactions with
others (e.g., the assumption that human beings are rational).
C. People engage in “behavioral sequences,” which are defined as a series of actions designed to achieve one’s goals.
1. Partners in a relationship have “power” over one another—the dependence on one another to achieve
particular outcomes. There are two types of power.
a. Fate control—refers to one’s ability to affect a partner’s outcome
b. Behavioral control—refers to one’s ability to cause another’s behavior to change by changing one’s own
behavior
2. To cope with the power differentials and the costs associated with exercising power, individuals develop
patterns of exchange. Three matrices have been developed to describe these patterns.
a. Given matrix refers to the behavioral choices and outcomes that are determined by
a combination of internal (personality, skills) and external (family influence, media) factors. Also known
as the nature of the situation.
b. Effective matrix represents the variety of alternative behaviors and outcomes that
guide an individual’s choice for behavior in the social exchange (e.g., family members’ resistance as an
influence can be adjusted by discussing the relationship with them). Also known as the transformations
that will be made in the relationship.
c. Dispositional matrix is used to illustrate the way in which two people believe that rewards should be
exchanged between them in the relationship. Also known as the kinds of dispositions a person has.
V. Critique of SET
A. Sabatelli and Shehan (1993) criticize the theory as untestable. The central concepts of costs and rewards are not
clearly defined.
B. A second criticism is that the theory views humans as rational calculators who are able to come up with numerical
representations of their relational lives. Too much emphasis is placed on cognitive awareness of actions.
C. Duck (1994) argues that people are not as self-interested as the theory assumes. He resists the notion of applying a
marketplace metaphor to describe individuals’ relational choices.
D. A final complaint is that the theory fails to focus on the importance of group solidarity and its role in individual
needs fulfillment.

During the 1970s and 1980s, UW sociologists Richard Emerson and Karen Cook expanded what is called "social exchange theory." Through a series of innovative laboratory experiments and theoretical studies, the researchers developed and refined what has become a major school of thought in contemporary social psychology. Emerson was a member of the UW department of sociology from 1964 until his death in 1983, and Cook, from 1972 to the present.

Social exchange theory is based on a central premise: that the exchange of social and material resources is a fundamental form of human interaction. With roots in earlier theories developed in cultural anthropology, neoclassical economics, and psychology, the school of thought on social exchange developed at the UW focused on how interaction patterns are shaped by power relationships between individuals, and the resulting efforts to achieve balance in exchange relations.

For example, in the first of a series of experiments dealing with social power and equity in exchange networks, the researchers studied factors and constraints that affected the use of power in a simulation of negotiated trade agreements. The simulation involved 112 male and female participants in a specially developed computerized laboratory and communication network. Each of eight subjects was connected to three others as bargaining partners, forming two separate four-person networks. Subjects sought to increase their profits by entering into "trade agreements" for "resource units." Subjects could pursue either formal or informal negotiating procedures before a "transaction" was completed. The experimental design allowed the researchers to study power, equity, and the creation of commitment during these bargaining processes.

The work of Emerson and Cook, considered influential and innovative by their colleagues, has had a wide impact of the field of sociology. "The social exchange school has continued to spawn new theoretical insights and experimental research," notes UW sociology chairman Charles Hirschman.


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"Power, equity, and commitment in exchange networks," American Sociological Review, 43, 721, (1978).

Information provided by Dr. Charles Hirschman is gratefully acknowledged.

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Social Exchange Theory



Classic Study of Peter Blau 1955


Setting: Federal law enforcement agency
Organizational Rules:
If you have a problem do not ask your colleagues, ask you supervisor
Social Practice:
Agents asked their colleagues for help


Interpretation in terms of social exchange theory:
Well known Social Exchange Theorists: Blau (1955, 1964), Thibout and Kelley (1959), Homans (1974), Emerson (1981), Coleman (1990).

Advice seeker's choices and their rewards and costs.
Ask other agent
do better job +8
reveal lower social status -5
Don't ask
remain independent +6
do a bad job -6
Ask supervisor
do better job +8
lower job ratings -10


There are two sides in a bargain. Here the

advice givers choices and their rewards and costs
give advice
approval +6
needs to spend time -2
do own work
no interruption +2
no acknowledgment of superior performance -6
My own idea: If you refuse to give advice
less interruption +2
social sanctions from colleagues -12 and no approval -6












To optimize their profits, colleagues at the federal agency seek and gave advice. This happened despite the official prohibition of asking colleagues and the regulation that they have to ask the supervisor instead.



Cultural Norms for exchange


What happens when you received help?



Norm of Reciprocity
People do not like to be in debt of others, this decreases our social esteem or self esteem.






Cultural Norms that determine Distribution Rules of the Exchange


How much of the help you received do you return?

Should we decide according to



A) Equality

B) Equity, or

C) Need



Equality Norm
Exactly as much as reward as you received


But what happens if the other exchange partner can produce reward much easier.

Example: The experienced Agent A has no problem to help the newly employed Agent B. So should Agent B work 4 hours overtime to give agent A the same help he was able to produce in 5 minutes?

In our society we might apply the rule of equal profits.



Equity Norms (Adams, Homans) or Distributive Justice Norm.
Profits, not rewards should be equal. Then we define a situation as just. Profits take into consideration rewards and costs.


Would you help the departments top ace if you could, or would you help the newcomer who is completely disoriented in the new environment?



The need rule





Situational Factors determine which Distribution Rule is employed


Three norms that determine the outcome in an exchange relationship: 1. equality 2. equity 3. need



Employment of these three rules depends largely on the situation.



Going shopping we do not want to see another customer paying less. We demand equality.

2. We want to return help in a way that the other gets the same out of it. Probably I can give her something that means a lot to her, but is easy for me to achieve.

Within the family we usually employ the principle of need.





Business exchange versus social exchange.

Is economic exchange, different than social exchange?

It is more likely that the equity principle is employed in social exchange. Also: Social exchange entails unspecified obligations. In economic transactions the quantities are highly specified.



Is a flat rate tax system fair? Is our nation is a social system or an economic entity. Should the government should focus on social exchange or business exchange.



What is the fair price for a new car? This is regulated by the market. No need rules or equity rules apply here. The price should be the same for everyone. Is this fair? Some can use it for tax deduction.



4. Currency of Exchange: Resources