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While the general study of market exchange is the domain of the discipline of economics, the social, interactional components of exchange (in a market context or not) interest other social scientists. As German sociologist Georg Simmel noted: “Exchange is not merely the addition of the two processes of giving and receiving. It is, rather, something new. Exchange constitutes a third process, something that emerges when each of those two processes is simultaneously the cause and the effect of the other” ([1907] 1971, p. 57).

Noneconomic investigations of exchange appeared in anthropology in the 1920s. For example, in 1922, Bronislaw Malinowski published a study of islander life that analyzed status components of exchanges that were different from (although related to) simple consumption or material interests. Other anthropological studies followed that emphasized the importance of gift giving and reciprocity for the maintenance of cohesive relationships.

A series of sociological and psychological studies of exchange emerged in the 1950s. George Homans adapted behavioral or operant learning tenets to describe behavior among individuals. Because operant principles emphasize how individuals act on the basis of previous experience, Homans’s formulation also focused on the past as predictive of future behavior. He presented human exchanges as involving rewards and costs and argued that people responded to these exchanges so that benefits outweighed costs. Somewhat different from Homans’s approach, Peter Blau developed a more economic framework in his exchange formulations. So, for example, in his analysis of bureaucracies, he pointed out that people compete for scarce resources and trade different social commodities (such as advice).

In psychology, John Thibaut and Harold Kelley developed their theories of social power that involved the idea that the amount of power one individual or group possesses is determined, in part, by the alternatives present. Thus, individuals gauged whether to engage in exchanges dependent upon the value of the exchange itself and if alternatives were available. Alternatives also affected the way comparisons among activities were perceived; that is, what was experienced in the past affected how attractive or unattractive a particular option appeared.

Richard Emerson’s formulation of power-dependence theory in social relations took these previous conceptualizations and developed an overarching theory. It specified a relational aspect to power that placed the exchange relation as central. Power was inversely related to dependence: For a given exchange relation, the more powerful an individual or group, the less dependent on the relation. Further, Emerson’s theory posited a continual balancing mechanism in exchange relations. If people had power, they used it because it gave them advantage. But, if power was used, it was (incrementally) lost. This shift of power leads to balancing.

Further distinctions in different kinds of exchanges emerged in work that followed. Specifically, Linda Molm distinguished two types of exchanges that had different properties. Negotiated exchange involves bargaining and negotiation and then agreement upon the terms of the exchange. In contrast, reciprocal exchange does not involve negotiation but, instead, is comprised of individual acts performed for an other or others without knowledge about future reciprocation. Given equivalent costs and benefits, reciprocal exchanges generate more trust and affect than do negotiated exchanges. Part of the reason for this is that, at least under some conditions, risk generates trust.

Molm investigated coercive power in these nonnegotiated exchanges as well. Coercive power (in the sense of punishing others) is seen by participants as intentional and most likely to be used when an actor has little reward power. This is probably the case because coercion is risky and can decrease the possibilities of future beneficial exchanges. So, even though punishment can be an effective strategy if it is consistently and contingently applied, actors do so relatively infrequently.

While there are differences between negotiated and reciprocal exchanges, there are similarities as well. One important similarity rests with the negative emotion that can be generated with power use. For example, the conflict spiral, a theory about bargaining processes, documents that unequal power, even without punishment, can produce negative emotion.

Much of the research on negotiated exchange has focused upon the idea of alternatives to valued resources and so has considered exchange networks. Relative power of positions in simple networks can be analyzed by calculating the alternatives to a given position. Depending upon the number and extent of alternatives within the network, different kinds of relationships can be defined. Particularly important for the exercise of power is the ability to exclude others. The network then can define strong, equal, or weak power. There have been a number of attempts to find methods of predicting power in networks that vary in structure and size. There is the graph theoretic approach, a game theory approach, and an expected value mode, among others.

Emotion is also implicated in the exchange process. The affect theory of social exchange, for example (see, in particular, Lawler 2001), maintains that while social exchange has an instrumental and individual function, the exchange itself involves a group product that fosters emotional, affective processes. While rational choice formulations had examined how commitment in exchange networks was fostered by uncertainty reduction, it has been demonstrated that affect, in and of itself, can also generate commitment. Productive exchanges provide particularly strong arenas for emotion. These exchanges occur in settings in which group members have equal power, coordination issues exist and must be solved, and interdependence of group members is necessary for production of the outcome.

While the study of exchange has always been important to group dynamics, the addition of emotion and notions of risk, trust, and uncertainty has transformed early investigations of simple cost and benefit. The transformations have expanded both the depth and scope of exchange formulations. For example, depth has been transformed by analysis of actors’ strategies in the face of contingencies, and scope has been transformed by analysis of the network configurations under which exchange occurs. In this regard, different disciplines have contributed different insights to the study of social exchange: game theory in economics has focused upon strategies, anthropology has emphasized the cultural components implied in cohesive groups, psychology has investigated issues related to risk and uncertainty, and sociology has focused upon the network structure under which exchange occurs.

Bibliography:

Blau, Peter M. 1964. Exchange and Power in Social Life. New York: Wiley.
Cook, Karen S., and Richard Emerson. 1978. Power, Equity and Commitment in Exchange Networks. American Sociological Review 43: 721–739.
Emerson, Richard M. 1972. Exchange Theory, Part I: A Psychological Basis for Social Exchange. In Sociological Theories in Progress, Vol. 2, eds. J. Berger, M. Zelditch Jr., and Bo Anderson, 38–57. Boston: Houghton Mifflin.
Homans, George C. 1958. Social Behavior as Exchange. American Journal of Sociology 63: 597–606.
Lawler, Edward J. 2001. An Affect Theory of Social Exchange. American Journal of Sociology 107: 321–352.
Malinowski, Bronislaw. 1922. Argonauts of the Western Pacific. New York: Dutton.
Molm, Linda D. 1997. Coercive Power in Social Exchange. Cambridge, U.K.: Cambridge University Press.
Molm, Linda D., Nobuyuki Takahashi, and Gretchen Peterson. 2000. Risk and Trust in Social Exchange: An Experimental Test of a Classical Proposition. American Journal of Sociology 105: 1396–1427.
Simmel, Georg. [1907] 1971. On Individuality and Social Forms, ed. Donald N. Levine. Chicago: University of Chicago Press.
Thibaut, John W., and Harold H. Kelley. 1959. The Social Psychology of Groups. New York: Wiley.
Willer, David, ed. 1999. Network Exchange Theory. Westport, CT: Praeger.