• The chapter focuses on three related theories: exchange theory, rational choice theory, and network theory.

• Rational choice theory influenced the development of exchange theory, particularly its assumption of a rational actor.

• Despite this influence, contemporary exchange theory has evolved with other intellectual influences and moved in unique directions (Willer and Emanuelson, 2008).

• Contemporary exchange theory and rational choice theory are not identical.

• A key difference is that rational choice theory centers on individual decision making, while exchange theory focuses on the social relationship as the basic unit of analysis.

• Recently, exchange theorists have increased their focus on networks of social relationships, linking exchange theory with network theory.

• Network theory shares similarities with rational choice theory but rejects the assumption of human rationality (Mizruchi, 1994).

• These three theories share a positivistic orientation, unlike the theories discussed in the preceding chapters.

Exchange Theory

Behaviorism

• The development of exchange theory traces back to its roots in behaviorism.

• Behaviorism is primarily known in psychology but also influenced behavioral sociology directly and exchange theory indirectly.

• The behavioral sociologist studies the relationship between an actor’s behavior’s effects on the environment and how these effects influence the actor’s future behavior.

• This relationship is fundamental to operant conditioning, where behavior is modified by its consequences.

• Early behavior, especially in infants, can be viewed as random behavior.

• The environment—social or physical—is affected by the actor’s behavior and reacts back, which can be positive, negative, or neutral.

• The nature of this reaction influences the actor’s later behavior:

  • If the reaction is rewarding, the behavior is likely to be repeated in similar situations.

  • If the reaction is painful or punishing, the behavior is less likely to recur.

• The focus is on how the history of environmental reactions or consequences shapes present behavior.

• By understanding what triggered a behavior in the past, one can predict whether the actor will repeat that behavior in the current situation.

• Of particular interest to behaviorists are rewards (reinforcers) and costs (punishments).

• Rewards strengthen or reinforce behavior, while costs reduce the likelihood of the behavior.

• The concepts of rewards and costs had a powerful impact on early exchange theory.

Rational Choice Theory

• The basic principles of rational choice theory originate from neoclassical economics, utilitarianism, and game theory (Levi et al., 1990; Lindenberg, 2001; Simpson, 2007).

• Debra Friedman and Michael Hechter (1988) proposed a “skeletal” model of rational choice theory based on various models.

• The theory focuses on actors who are seen as purposive or having intentionality, meaning they have ends or goals toward which their actions are directed.

• Actors possess preferences (or values, utilities), but rational choice theory does not investigate the nature or sources of these preferences.

• Actions are undertaken to achieve objectives consistent with an actor’s preference hierarchy.

• Two major constraints on action are considered:

  • Scarcity of resources: Actors differ in resources and access; those with more resources find achieving ends easier, while those with fewer resources may struggle or fail.

  • Opportunity costs: Actors must consider the cost of foregoing the next-most-attractive action when pursuing a goal. Choosing a highly valued end may be abandoned if resources are too low or if it risks the chance of achieving the next-best objective.

• Actors aim to maximize their benefits, balancing the chances of achieving a primary end against the effects on attaining the secondary goal.

• A second major constraint comes from social institutions. These include familial and school rules, laws, firm policies, religious institutions, hospitals, and funeral parlors that restrict feasible actions.

• These enforceable rules of the game (norms, laws, agendas, voting rules) systematically affect social outcomes by restricting available courses of action.

• Institutional constraints provide positive and negative sanctions that encourage or discourage certain actions.

• Two additional key ideas by Friedman and Hechter are:

  • An aggregation mechanism, which is the process by which individual actions combine to produce social outcomes.

  • The importance of information in making rational choices; originally assumed to be perfect or sufficient, but now recognized to be highly variable in quantity and quality, profoundly affecting choices (Heckathorn, 1997).

• Early exchange theory incorporated a rudimentary theory of rationality, with more complexity discussed later in the chapter regarding rational choice theory itself.

The Exchange Theory of George Homans

• The core of George Homans’s exchange theory is a set of fundamental propositions grounded in psychological principles.

• Homans emphasized that these propositions are psychological because:

  • They are usually stated and empirically tested by psychologists (Homans, 1967:39–40).

  • They deal with the behavior of individual human beings, which is generally the domain of psychology rather than sociology (Homans, 1967:40).

• Homans described himself as a psychological reductionist, meaning he sought to show how sociological propositions logically follow from more general propositions in psychology (Homans, 1974, 1984).

• Although based on psychology, Homans did not view individuals as isolated but as social beings who interact frequently with others.

• He explained social behavior through psychological principles, arguing that responses to social stimuli operate like responses to the physical environment (Homans, 1967:59).

• Homans acknowledged the Durkheimian idea of emergent social properties but argued these can be explained by psychological principles without new sociological propositions.

• He illustrated this with the concept of a social norm, stating individuals conform because they perceive conformity as advantageous, which psychology explains (Homans, 1967:60).

• Homans aimed to bring individuals back into sociology and develop a theory focusing on psychology, people, and elementary social life.

• His theory views social behavior as an exchange of activity, tangible or intangible, which is more or less rewarding or costly between at least two persons (Homans, 1961:13).

• Homans sought to explain large social phenomena (e.g., the Industrial Revolution) by applying the psychological principle that people act to increase their rewards.

• He was critical of structural-functional theories (e.g., Talcott Parsons) for lacking explanatory power, calling for general propositions to explain relations among sociological categories.

• Homans’s exchange theory is derived from both behavioral psychology and elementary economics (rational choice theory) (Homans, 1961, 1974, 1984).

• He regretted the label “exchange theory” because he saw his theory as behavioral psychology applied to social situations.

• Homans used B.F. Skinner’s study of pigeons as an exemplar of operant conditioning: a pigeon pecks a target and receives grain, reinforcing the behavior.

• Skinner’s pigeons exhibit individual behavior — one-sided reinforcement without reciprocity — unlike humans, whose exchanges are two-sided and reciprocal.

• Homans defined social behavior as involving at least two individuals where each’s activity reinforces or punishes the other, thus mutually influencing behavior.

• He argued no new propositions beyond Skinner’s principles are needed to explain social behavior if mutual reinforcement is accounted for, though he was reluctant to exclude possible future extensions.

• Homans focused on everyday social interactions but believed his principles could eventually explain all social behavior.

• Example of exchange relationship: Two office workers, Person and Other. Person needs help but avoids supervisor due to rules and fear of hurting promotion chances. Person asks Other for help. Other has spare time and helps. Person responds with thanks and approval. They exchange help and approval.

• Homans based his propositions on such reciprocal social exchanges, grounded in Skinner’s behavioral findings.