Social Exchange Theory: Relationship Reciprocity and Costs

Social Exchange Theory

Social exchange theory is a conceptual framework that has its roots in various disciplines, including social psychology, sociology, and economics. It posits that social behavior is a consequence of an exchange process. The goal of these exchanges is to maximize benefits and minimize costs. Psychologist George Homans is a key figure in the development of this theory, laying the groundwork in the field of psychology with his foundational principles.

Key Components:

  • Reciprocity: This principle suggests that when one individual provides a benefit to another, there is an expectation of a future reciprocal action.
  • Reward and Cost: The theory proposes that individuals assess the potential rewards and costs of social interactions and make decisions accordingly.
  • Profit Principle: The behaviors that provide the greatest reward at the least cost are preferred.

Typologies of Exchanges:

  • Direct Exchange: Involves reciprocal actions between two parties.
  • Generalized Exchange: A non-reciprocal interaction where the giver is compensated by a different member of the social network, not the initial receiver.

The applications of social exchange theory span numerous settings, making it essential for analyzing social dynamics in personal relationships, workplaces, and broader societal interactions. It provides a framework for understanding the intricate balance of human interactions, the motivation behind social behavior, and the expected outcomes from such behaviors.

Social Exchange Principles and Dynamics

Exchange processes in social exchange theory refer to the actions and interactions between individuals that involve a mutual transfer of resources. These resources may be tangible, such as money or gifts, or intangible, such as favors or support. Individuals engage in exchanges aiming to receive a benefit or reward.

Cost-benefit analysis is a cornerstone of social exchange theory, positing that individuals assess the potential rewards and costs of a social interaction. People tend to pursue relationships and exchanges that offer the most benefits with the least associated costs, such as effort and risks.

Rewards are the positive outcomes derived from social exchanges, while costs represent the negative aspects or what needs to be expended to achieve the rewards. Social exchange theory suggests that for an exchange to be sustained, its rewards must outweigh its costs. They prioritize exchanges yielding beneficial outcomes over those that are costly or less rewarding.

Dependence in social exchange theory emerges when an individual relies on another for rewards. The level of dependence affects the power balance within relationships.

Greater dependence on another’s resources fosters more power for the provider, allowing them to influence the exchange terms. Conversely, reduced dependence can decrease one’s power within the exchange.

Interdependence and Self-interest

Self-interest and interdependence are essential features of social trade. These are the fundamental types of interaction in which two or more actors have something of value to one other and must determine whether to exchange and in what amounts.

Homans describes exchange mechanisms using individualist principles. Individual self-interest he defines as a combination of economic and psychological requirements. Fulfilling self-interest is frequently seen in the economic domain of social exchange theory, where rivalry and greed can be common.

The social psychologists John Thibaut and Harold Kelley regard the mutual interdependence of individuals as the key topic in the study of social behavior. They created a theoretical framework that emphasizes the interdependence of actors. Thibaut and Kelley also emphasized social ramifications of other forms of interdependence, such as reciprocal control.

Equity and Inequity

Individuals in the process of equity and inequity will compare their reward to those of others in terms of costs. Equity is described as the relationship between a person’s inputs and outputs on the work.

Qualifications, advancements, job interest, and work ethic are some examples of inputs. Some outcomes include pay, fringe perks, and power status.

The individual will primarily seek an equitable input-outcome ratio. Inequity occurs when an individual perceives an unequal ratio between their own and others’ outcomes. This can happen either directly between the two parties or with the involvement of a third party. An individual’s perception of equity or inequity may fluctuate depending on the individual.

Theoretical Perspectives

Social exchange theory is not a single theory, but rather a framework within which numerous theories may interact with one another, whether through dispute or mutual support. All of these ideas rely on a number of assumptions about human nature and relationship dynamics.

Thibaut and Kelley’s theory is built on two conceptualizations: one on the nature of individuals and one on interpersonal connections. As a result, the assumptions they make fall into the same categories.

Social exchange theory makes the following assumptions about human nature:

  • Humans desire rewards and shun punishment
  • Humans are rational beings
  • The standards that humans use to assess costs and rewards change throughout time and from person to person

Social exchange theory makes the following assumptions about the nature of relationships:

  • Relationships are interdependent.
  • Relational life is a process.

Comparison Levels

John Thibaut and Harold Kelley offered two comparison criteria for distinguishing between relationship satisfaction and relationship stability. This evaluation is based on two sorts of comparisons: comparison level and comparison level for alternative. According to Thibaut and Kelley, the comparative level (CL) is a benchmark that represents what people believe they should obtain in terms of benefits and expenses from a certain relationship.

A person’s comparison level can be defined as the criterion by which an outcome appears to satisfy the individual. The comparison level alternative (CLalt) is defined as “the lowest level of relational rewards a person is willing to accept given available rewards from alternative relationships or being alone”.

When employing this evaluation technique, a person will explore alternate payoffs or incentives outside of the existing connection or exchange. CLalt measures stability rather than satisfaction. If people perceive no other option and fear being alone more than being in a relationship, social exchange theory predicts that they will stay.

Applications of Social Exchange Theory

Exchange theory has significant implications across various social structures, illuminating the dynamics of interaction where resources are traded, whether these resources are tangible or not. It provides a framework for understanding how these exchanges affect relationships and organizational structures.

Organizational Contexts

In organizational settings, Social Exchange Theory is particularly useful in understanding how management and staff influence each other’s behaviors through reciprocal exchanges. For instance, the practice of recognizing organizational citizenship behaviors is viewed as a beneficial exchange where employees receive symbolic or material rewards in return for their commitment and discretionary effort.

Management can use positive reinforcement through recognition and rewards lead to enhanced performance. In terms of staff, a sense of obligation is stimulated when employees feel valued, fostering loyalty and extra-role behaviors.

Maarten van Houten’s 2022 study of vocational education institutions demonstrates how, in social exchange connections between teachers, reciprocity and feelings of ownership, affection, and interpersonal safety influence individual professionals’ decisions about what to share with whom. Colleagues who never ‘pay back’ and facilitate true exchange (that is, who consume rather than produce and share) risk being excluded.

The study also mentions the prospect of ‘negative rewards’: the exchange of one’s expertise, materials, or other resources may allow someone else to misuse what was contributed and/or take credit someplace in the team or organisation. As a result, interpersonal relationships and ‘fair’ exchange appear to be vital, as does some sort of reward and thankfulness mechanism (perhaps organisation-wide), as these influence individual professional discretion as well as the degree and success of exchange.

Social Networks

Understanding interpersonal disclosure in online social networks is an interesting application of social networking theory. Researchers in 2010 used SET to explain self-disclosure in a cross-cultural sample of French and British working professionals.

They demonstrated that reciprocation is the principal advantage of self-disclosure, while risk is the fundamental cost of disclosure. They found that positive social influence to use an online community improves online community self-disclosure; reciprocity enhances self-disclosure; online community trust increases self-disclosure; and privacy risk beliefs reduce self-disclosure.

At the same time, a propensity toward collectivism encourages self-disclosure. Similar research used SET to investigate how privacy concerns vs a need for interpersonal knowledge drive the usage of self-disclosure technologies in the context of instant messaging.


According to the theory, people may lose previously established relationships because they feel they are no longer advantageous. Due to a lack of incentives, one may believe that a relationship or communication is no longer necessary.

Following this, the process of looking for new partners and resources begins. This enables the continuance of networking. This procedure may be repeated on a regular basis.

One research team adapted this idea to new media (online dating). The study investigates the various aspects involved when a person decides to start an online connection. Overall, the study adhered to the social exchange theory’s premise that “people are attracted to those who grant them rewards”.


Despite its widespread application, Social Exchange Theory has been subjected to numerous critiques and parallel expansions. These critiques and expansions have evolved to encompass and address theories of social justice, explore intersections with microeconomics, and elaborate on the role of communication within exchanges.

Russell Cropanzano and Marie S. Mitchell describe how one of the key challenges with social exchange theory is a lack of information in studies on various exchange rules. Reciprocity is a prominent trade rule explored, however Cropanzano and Mitchell argue that the theory would be better understood if additional research programs addressed a range of exchange rules, including altruism, group gain, status consistency, and competitiveness.

According to Meeker, during the trade process, each unit considers at least the following elements: reciprocity, rationality, altruism (social duty), collective gain, prestige, consistency, and competitiveness (rivalry).

Michael Rosenfeld has identified substantial shortcomings in Social Exchange Theory and its application in the selection of mates/partners. Rosenfeld specifically examined the constraints of interracial couples and the use of social exchange theory. His analysis suggests that in current culture, there is less of a disparity between interracial couples’ education levels, socioeconomic status, and social class level, rendering the previously known application of social exchange meaningless.

The application of Social Exchange Theory often intersects with notions of justice. Critiques have pointed out that the theory fails to address equity and fairness in relationships, leading to a meta-analytic test of affect-based perspectives of exchange.

This body of work argues that equitable exchanges create stronger, more sustainable relationships. Expansion in this area includes exploring how perceptions of justice can influence social support and overall organizational behavior.

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