SOCIAL EXCHANGE THEORY: THIBUT AND KELLEY'S COST EF FECTIVE ANALYSIS What Is Social Exchange Theory? ‘According to social exchange theory (Thibault & Kelly, 1959), social behavior involves sacial exchanges where people are motivated by obtaining something of value (reward) in exchange for forfeiting something else of value (cost) In social exchanges, like economic exchanges, people seek profit and are disturbed when there iso equity in an exchange or when others are rewarded more at the same costs incurred by the individual (Redmond, 2015) Social exchange theory addresses three questions. Firstly, the question af how people make decisions about haw much they are willing to give in exchange for a particular reward. Secondly. what factors influence people to pursue or terminate relationships. And lastly, Why and whether people feel resentment when they feel they have put more effort into sustaining a relationship than their partner (Redmond, 2015) Social exchange theory has its roots in Homan's (1958) paper Social Behavior as Exchange. In this work, Homans contrasted the actions and exchanges of individuals to the actions of institutions. He believed that individual behaviors. and exchanges could affect the actions of institutions. Biau's (2017) Exchange and Power in Social Life drew on Homan’s focus on groups and institutions to lay the thearetical foundation for social exchange theory. Unlike Humans, wha emphasized psychology as the foundation of human decision-making, Biau's vision of social behavior paralleled microeconomics. He labeled this vision with Homan's term “social exchange theory” (Cook and Emerson, 1987). Social exchange theory's foundational principles have inspired a large number of alternate theories. These range fram applications of social exchange theory in a specific concept ta expanding upon the foundational principtes of the theary. ‘Social Exchange Theory (SET) Explained There are five guiding principles of social exchange theory (Redmond, 2015) Principle 1: Social behavior can be explained in terms of costs, rewards, and exchanges: this, principle's importance comes from how it loosely applied economics ta human decision-making. Principle 2: Peaple seek to maximize rewards and minimize costs in the pursuit of the greatest Profit: this reflects a belief that people are generally motivated by their own self-interest, regardless of the decision. ‘relationship that at one time seemed to be a high reward or low cost may shift to one with increasing costs and low rewards, causing that person to retum to a more rewarding level or terminate the relationship. Principle 3: Social interaction involves two parties, each exchanging a reward needed by the other person: in order to get rewards, people must exchange something better (Burns, 1973). This creates interdependent relationshipsPrineiple 4: Social exchange theory can be used to explain the development and management of interpersonal relationships: the economic principles underlying social exchange theory must be adapted so that they can apply sociologically. This has led sociologists such as Altman and Taylor (1973) to create social penetration theory ta describe relational development. Principle 5: Social exchanges affect the relationships among members of groups and organizations. For decades, researchers such as Blau (2017) have discussed how the need for advice and assistance leads to exchanges among group members. ‘These fortify group structures, as those who are able to give advice are rewarded with respect. prestige, or possibly reciprocal action from the person receiving the assistance. initially, seeking advice can form the basis of a mutually beneficial relationship; however, to continue, the equitable exchange needs to continue. Costs Vs, Benefits Social exchange theory suggests that we essentially take the benefits of a relationship and subtract the costs in order to determine how much it is worth Costs involve things that you see as negatives, such as having to put money, time, and effort into a relationship. For example, if you have a friend who always borrows money from you and does not repay it, this might be seen as a high cost. © Benefits are things that you get out of the relationship, such as fun, friendship, ‘companionship, and social support. Your friend might be a bit of a freeloader, but bring a Jot of fun and excitement to your life. As you are determining the value of the friendship, you might decide that the benefits outweigh the potential costs. © Positive relationships are those in which the benefits autweigh the costs. © Negative relationships occur when the costs are greater than the benefits, ‘Thibault and Kelley (1958) also identified a number of different stages of a relationship: ‘Sampling: partners consider the possible costs and benefits in the new relationship through direct ar indirect interactions and compare it to other relationships available. Bargaining: partners exchange costs and benefits; they negotiate and identify what is the most profitable, Commitment: the relationship is stable and maintained by a predictable exchange of rewards. Institutionalization: partners have established norms in terms of costs and benefits. They now settle dovin. Expectations and Comparison Cost-benefit analysis plays a major role in the social exchange process, but so do expectations. ‘As people weigh benefits against the costs, they da so by establishing a comparison level that is often influenced by past experiences.For example, if your previous romantic partner showered you with displays of affection, your ‘comparison level for your next relationship is going ta be quite high when it comes to atfeetian. if your next romantic partner tends to be more reserved and less emotional, that person might not measure up to your expectations. Ifyou have always had poor friendships, your comparison levels at the start of a relationship will be lower than a person who has always had supportive and caring friends. Expectations can appear within work relationships as well. Research indicates that there is an “expectation of reciprocity” within workplace settings between management and staff. If an. employee doesn't feel that their effort is being reciprocated from higher-ups, this can affect their work. Impact of Social Exchange Theory on Relationship: ‘The idea that relationships are based on an exchange can affect how we relate with others. ‘The Honeymoon Phase ‘The length of a friendship or romance can play a role in the social exchange pracess. During the early weeks or months of a relationship, often referred to as the "honeymoon phase,” people are more likely to ignore the social exchange balance. Things that would normally be viewed as high cost are dismissed, ignored, or minimized, while potential benefits are often exaggerated. When this honeymoon period finally comes to an end, there will often be a gradual evaluation of the exchange balance. ‘At this point, downsides become more apparent and benefits start to be seen more realistically. This recalibration of the exchange balance might lead to the termination of the relationship if the balance is tipped too far toward the negative side. Evaluating the Alternatives Another aspect of the social exchange process involves looking at possible alternatives. After ‘analyzing the costs and benefits and contrasting these against your comparison levels, you might start to look at other options. ‘The relationship might not measure up to your comparison levels, but 2s you survey the potential altematives, you might determine it is stil better than anything else available. As a result, you might reassess the relationship in terms of what may now be a somewhat lower ‘comparison level ity Determines Health Since social exchange theary is based on give and take, if this back and forth exchange is not considered equitable, it can affect the health of the relationship.1 The primary giver may feel resentful while the primary receiver may be riddled with quilt. Ifthis type of exchange happens only once or twice, it likely won't impact the relationship. However, ifit becomes a patter, feelings of resentment and guilt can start to build, creating a point of contention between the two.