Social Exchange Theory (BB)

The Theory at a Glance
-social behavior often involves social exchanges where people are motivated to attain some valued reward for which they must forfeit something of value.
-we seek profits in our exchanges such that rewards are greater than costs.
-we are disturbed when there’s not equity in an exchange or when others are rewarded more for the same costs we incurred
Visualization of Theory
Exchange = Trade something of value (cost) for something need/valued (reward)
Rewards – Costs = Positive Outcomes (profits) or Negative Outcomes (net loss)
Inequity = Cost>Reward or My Costs>Your Costs or My Rewards
Elements of Social Exchange Theory
-Value of Reward
-Social Rewards
-Costs
-Profit
-Equity and Distributive Justice
Value of Reward
“a man emits a unit of activity, however that unit be defined, and this unit is either reinforced or punished by one or more units of activity he receives from another man or by something he receives from the non-human environment”
– how much the reward you’re receiving means to you
-$5 may mean more to some people than it does to others
-fluctuates over time: food is valuable when you’re hungry, but not once you’re already full
Social Rewards
when rewards can only be met through interaction with another person
-being loved, respected, socially accepted, etc.
-pleasure, satisfaction, gratification and fulfillment of needs
Costs
something of value that’s given up, withdrawal of a reward, or punishment
-can be money, time, energy, work
Profit
Reward-Cost
The greater the rewards & fewer costs, the greater the profit a person gains
Equity and Distributive Justice
trying to achieve a “fair” trade
Equity: based on partners seeking a ratio of rewards and costs that are the same for both partners
-Ex: if you’re putting more time and effort into a relationship than your partner you’ll attempt to create more balance/equity
1. Payback period in a relationship (if borrowed classmate $5 would expect to be paid back next day but would give best friend longer)
2. Assessment of the costs & rewards relative to our partners’ abilities to provide them or to the relative “availability of resources”
Distributive Justice
an outcome of an exchange where the two parties are rewarded proportionate to their costs
aka the more you invest, the greater your return
Social Behavior
an exchange of goods, material goods but also non-material ones, such as the symbols of approval or prestige
OR
an exchange of activity, tangible or intangible, and more or less rewarding or costly, between at least two persons
Social Exchanges
voluntary actions of individuals that are motivated by the returns they are expected to bring and typically do in fact bring from others
Intrinsic (love)
Extrinsic (help with chores)
Guiding Principles of Social Exchange Theory
1. At the psychological level we use costs and rewards as part of our decision making process. Pros/cons
2. How we use economic principles to manage our interactions with other people – our social exchange.
3. At the relational level we apply economic principles in selecting and evaluating our relationships, weighing their rewards and costs as well as comparing those to alternatives
Principle 1: Assessing the Costs and Rewards
Social behavior can be explained in terms of costs, rewards, and exchanges
Principle 2: Determining Profit
People seek to maximize rewards and minimize costs in pursuit of the greatest profit
Principle 3: Managing Interdependence
Social Interaction involves two parties, each exchanging a reward needed by the other person
Principle 4: Assessing, Comparing, and Predicting Relationship Rewards and Costs
Social exchange theory can be used to explain the development and management of interpersonal relationships
Outcome
monitoring the rewards and costs we are getting at any given moment; aka current outcome/profit
Comparison Level
Evaluate the rewards and costs of relationship in terms of how they compare to what we expect or believe we deserve in such a relationship
Comparison Level of Alternatives
we compare the rewards & costs of other potential relationships to a given relationship
Forecasted Rewards and Costs
We assess the future of our relationships, evaluating the potential rewards and costs
Cumulative Rewards and Costs
the cumulative rewards and costs assessment represents the sum total of the rewards & costs (profits) a person receives over the history of the relationship.
Principle 5:
Social exchanges affect the relationships among members of the groups and organizations