Social exchange theory proposes that human relationships are formed by a subjective cost-benefit analysis where people compare rewards to costs. The theory was developed in 1958 by George Homans who said people are more likely to repeat actions that were previously rewarded. It explains why people choose certain relationships by evaluating what they gain from things like acceptance, loyalty, and companionship versus the costs of time, effort, and adjustments. Critics argue it assumes humans always act rationally in relationships and reduces interactions to economic exchanges.

1. SOCIAL EXCHANGE THEORY
Presented by
Huma Javed

2. SOCIAL EXCHANGE THEORY
🠶 Definition
🠶 social exchange theory isa social psychological and sociological
perspective that explains social exchange and stability as a process of
negotiated exchanges between parties.
🠶 theory posits that human relationships are formed by the use of a subjective
cost-benefit analyses and the comparison of alternatives

3. History of the theory
🠶social exchange theory was developed in the year 1958, by the
sociologist George Homans. He defined social exchange as the
exchange of activity, tangible or intangible and more or less
rewarding or costly, between at least two people.
🠶After Homans developed the theory, two other theorists; Peter Blau
and Richard Emerson continued to write about it. Blau focused on
economic and utilitarian perspective while Richard focused on
reinforcement principals which believe individual base their next
social move on past experiences.

4. History cont.
Homans summarized the system of social exchange theory into three
propositions
1.Success proposition – when a person is rewarded for his or her
actions, he or she tends to repeat the action.
2.Stimulus proposition – the more often a particular stimuli has
resulted in a reward in the past, the more likely it is that a person will
respond to it.
3.Deprivation – the more often in the recent past a person has received
a particular reward, the less valuable any further unit of that reward
becomes.

5. Homans
⚫Perspective
◦ people will do things that are rewarding
◦ the more similar a situation is to one from
the past, the more likely actions that were
rewarded will be performed now
◦ rewards gain value when deprived (and
vice versa)
◦ failure to get rewards expected = anger
getting rewards not expected = happiness
◦ the frequency of a person doing an action
depends on the value of the outcome and
probability of getting it

6. Key Concepts
⚫ Rewards
◦ Pleasing a Social Interaction
⚫ Resources
◦ Material or Symbolic Exchanged in a Social Interaction
⚫ Costs
◦ Investment of Time and Energy
⚫ Principle of Satiation
◦ Loosing value due to increased availability
⚫ Principle of Deprivation
◦ Increasing value due to decreased availability
⚫ Comparison Level (CL)
◦ Societal norms, past experiences, observations
⚫ Comparison Level of Alternatives
◦ Evolving Subjective Individual Standard
⚫ Dependence
◦ Cost as Participating in Relationship
⚫ Interdependence
◦ Mutually dependent on the Relationship

7. Key Concepts (cont’d)
⚫ Power
◦ Greatest Resources
◦ Least Interested
⚫ Distributive Justice
◦ Reward and Cost being Proprotional
⚫ Equity
◦ Both individuals derive similar levels of rewards
⚫ Trust
⚫ Satisfaction
◦ Satisfaction = (Rewards - Cost) - Comparison Level
⚫ Commitment
◦ Social and Intimate Exchanges
⚫ Normative Orientations
◦ Societal/ Cultural Views on appropriateness of behavior in
relationships

8. Why the theory was developed
 To help people understand relationships well; why some
relationships work while others fail.
 To explain why we choose to start and continue only certain
relationships.
 To explain communication and interaction, as well as the factors
governing interaction in humans.

9. What does the theory say
🠶It says that humans base their behaviours on rational calculations
designed to maximize individual profit.
🠶Most people value acceptance, loyalty, financial support, affection
and companionship and so we might find it rewarding to be in a
relationship with a person who enhances our social status. This is
classified as a reward.
🠶On the other hand costs arise whenever there is a negative value for
an individual. For instance relationship that cost us time, money and
effort or all the adjustments we make to coordinate with another
person.
🠶 The net outcome is equal to rewards take away costs.

10. Application of the theory in communication
🠶Social exchange theory enhances interpersonal
communication as it develops from shallow relations to
intimate relationships. Persons are not only aware of what is
around them but also aware of their awareness.
🠶This theory implicates that human beings are aware of each
other’s concerns and needs thus this enhances effective
communication amongst people.

11. Application of the theory in social media
🠶Social exchange theory would be a valid paradigms for
studying and explaining how people form networks, express
their opinions, and pass information to each other in
applications such as Wikipedia, YouTube, Facebook, Second
Life, and Twitter.
🠶The theory also applies to Social Media from a marketer’s
perspective, because it breaks down the main human factors
involved in forming relationships with a gain to both sides. It is
certainly valuable to keep these factors in mind when analysing
and monitoring social media marketing efforts.

12. Criticisms
⚫Assumes humans act rationally when
deciding on an exchange
⚫Valuing self-interest
⚫Limited to dyadic relationships
⚫Difficult to have a personal approach to
situations
⚫The theory assumes that the ultimate goal of
a relationship is intimacy when this might not
always be the case.
⚫Theory reduces human interaction to purely
rational process that arise from economic

13. References
Cropanzano, R., & Mitchell, M. S. (2005). Social exchange theory: An
interdisciplinary review. Journal of management, 31(6), 874-900.
Cook, K. S., Cheshire, C., Rice, E. R., & Nakagawa, S. (2013). Social exchange
theory. Handbook of social psychology, 61-88.