Rational Choice and Social Exchange (Heath, 1976)

Rational Choice and Social Exchange (Heath, 1976)

A critique of exchange theory

Anthony Heath

When this volume was first published in 1976, exchange theory had recently come into the fore in sociology as an attempt to develop systematic theories of social behaviour comparable to those which economics had developed. In doing so it borrowed from many different intellectual traditions including economics and anthropology, behavioural sociology and on the traditional concerns of sociologists and social psychologists.

Dr Heath provides a systematic exposition of the principle components of exchange theory, and goes on to give a critique of these theories, paying particular attention to the success of their empirical applications. He concludes that exchange theory, despite its limitations, has an important part to play in the development of social science and is one of the most promising theories available.

Rational Choice and Social Exchange will be of interest to anyone concerned with the development of social science and in particular to students of sociology, anthropology, psychology and political science.

"any behaviour that is motivated by an expected return or response from another falls under the heading of exchange."

"The aim of this book... is to give an exposition and evaluation of some of the principal features of exchange theory."

"To explain social behaviour we really have very little alternative to looking at men's values, beliefs, and situations, and if the action approach reminds us of that it is doing a good job."

JLJ - there is yet another form of exchange - relating to one where an opponent has no clear opportunities. For example, in a game such as pool or billiards, I might reach a position where I have no shot, so I play a 'safety' and leave my opponent in a position where he likewise has no shot. He might then make a difficult shot, and then proceed to run the table. But he likely won't. In short, we can consider placing our opponent in positions where he has no good moves (this situation has value for us) so we are free to consider other opportunities for advantage. I might not consider or calculate every possibility that arises, assuming that when I reach the end or my horizon of planned sequence, either a new opportunity then arises, as in a pool game, or I can at least block my opponent from doing anything.

This 'threat' to always create a powerless position for my opponent-on-move has strategic value in exchange. A game can be thought of as an exchange where we give our opponent-on-the-move a position where he can apparently accomplish nothing. He does what he can, and in turn gives us a position where we can do nothing. This "exchange of nothing for nothing" eventually results in one player being unable to give his opponent a position where he can do nothing. At this point that player must be given a small opportunity, and the seeds of an advantage are planted.

p.1 Simmel went so far as to suggest that a great deal more social interaction takes form of exchange than is commonly recognized as such. Simmel went so far as to suggest that 'all contacts among men rest on the schema of giving and returning the equivalence' (Simmel, 1908, p. 387), while in another early work Malinowski (1926) demonstrated that 'give and take' pervades the social life of primitive societies. [JLJ - yes, I would agree that even modern society has at its base the concept of give and take - perhaps even in playing social games. The squares or pieces not "taken" by the player on the move are essentially "given" or made available to the other player to do the same, in a recursive scheme that can provide endless hours of amusement for the players.]

p.1 More recently Homans (1961) has suggested that most (if not all) social behaviour can be viewed as 'an exchange of activity, tangible or intangible, and more or less rewarding or costly, between at least two persons' (p. 13), while Blau has added that 'social exchange can be observed everywhere once we are sensitized by this conception to it, not only in market relations but also in friendship and even in love' (Blau, 1964, p. 88).

p.2 any behaviour that is motivated by an expected return or response from another falls under the heading of exchange.

p.5 The aim of this book... is to give an exposition and evaluation of some of the principal features of exchange theory.

p.5 Homans... said that 'much modern sociological theory seems to me to possess every virtue except that of explaining anything' (1961, p. 10) and who promised that his own book would be a 'book of explanation'.

p.7 game theory deals with a special class of situations involving uncertainty.

p.12 it is in principle almost as easy to apply indifference curve analysis to the allocation of time as it is to the allocation of money.

p.15 In many cases we will have no objective grounds for assigning numerical probabilities and we will therefore be faced with what were earlier defined as situations of uncertainty, not of risk. Here a different decision rule is called for, and the appropriate one is often supposed to be the minimax rule of game theory. [JLJ - yes, but minimax often does not work well in positions of complexity where our simple evaluations (lacking in rich detail) turn out to be incorrect. The positional style of play in chess is one such example where minimax as a heuristic fails to effectively untangle cause and effect. Ask any (reasonably good) correspondence chess player.]

p.15 As in chess, I can try to work out what my opponent's best replies are to my various moves, and I will select mine in the light of this information. It is therefore a game of strategy with each participant assessing what the other will do.

p.18 It should be clear by now that game theory is not attempting (and could not hope) to provide any general conclusions about how people behave in conditions of uncertainty.... to follow the minimax in all situations of uncertainty is an unduly conservative strategy and cannot be accounted rational.

p.19 an exchange will take place only if both participants believe that the exchange provides them with more utility than does any other option currently open to them. Thus, say Thibaut and Kelley, 'the formation of a relationship depends... upon whether or not the jointly experienced outcomes are above each member's CL_alt' (Thibaut and Kelley, 1959, pp. 22-3)... The basis for exchange, then, is that each side has something that the other wants... The exchange, therefore, enables both participants to be better off than they would have been without it.

p.19 they need not necessarily be better off than they were before. Indeed, whether or not they are is a good way of defining whether it is a voluntary exchange or a coerced one.

p.20 Both voluntary and coerced exchanges are equally amenable to the kind of rational choice explanation which Blau favors, and it seems unfortunate to restrict unnecessarily the scope of a theory. There will be plenty of inevitable restrictions all too soon.

p.23 a rational choice theory of power... The basic idea... the less satisfactory are the alternatives to a particular supplier, the more dependent one is on him and the higher the price that he will be able to obtain.

p.24 the bargaining power of the participants will vary according to the alternative sources of supply open to them. Men may use their bargaining power more or less adroitly, and it is certainly possible that changes in the available alternatives will not be reflected at all in the price. By and large, however, it seems a reasonable enough inference that the two will be correlated.

p.24 Thibaut and Kelley... argue that the level of a man's CL_alt determines his dependence upon a relationship and hence his power within it.

p.25-26 if men have some services to offer in return - but not particularly valued ones; if men have some alternative sources of supply - but not particularly satisfactory ones; if men can have some recourse to coercion... if men could steel themselves to do without... then surely we could expect reciprocal exchange of services... but it would be an exchange on very unfavorable terms... a man's power may be reflected in the price that he can secure for his services, and not only in his ability to get others to do whatever he wants. Indeed, this is surely the great advantage of the rational choice theory of power. To use the theory we have to know about the alternatives open to men and their valuation of them, and we can then make predictions about the consequential rate of exchange. But we do not actually need to measure power itself directly.

p.26 The theory of power has told us that the more dependent one is on a relationship the higher the price that one may have to pay, but it does not tell us what the price actually will be.

p.46 The decision whether or not to stay with one's husband, one's university or one's job depends on one's CL_alt - the alternative opportunities open to one - as well as on the level of rewards provided by husband, tutor or employer.

p.88 Finally, let us take a quick look at game theory and uncertainty. As I mentioned in chapter 2, game theorists do not claim that people actually follow minimax or mixed strategy rules. These are simply the things they ought to do (in the specified situations) if they are to behave rationally... A major difficulty with game theory, however is likely to be finding situations in the real world where the appropriate conditions actually hold.

p.101 The theory of exchange, like many of the rational choice theories, is deceptively simple... it follows inevitably from the theory of choice: if each individual chooses the course of action that yields him the most-preferred outcome of those available, then an exchange will take place only if it yields the most-preferred outcome available to both parties

p.121 Just as in the theory of power a change in the alternatives available alters the size of the bargaining area and hence the average rate of exchange, so too changes in demand or supply affect the alternatives available and the average rate of exchange. Indeed, the theories of power and price become practically indistinguishable.

p.159 Now it seems to me that rational choice theory is likely to have most explanatory power when modest amounts of deductive reasoning are called for; its predictive value decreases when creative thought is needed by the participants.

p.180 the action approach of Max Weber and his followers. This, as Cohen describes it, makes the following assumptions:

The actor has goals (or aims, or ends); his actions are carried out in pursuit of these.
Action often involves the selection of means to the attainment of goals...
An actor always has many goals; his actions in pursuit of any one affect and are affected by his actions in pursuit of others.
The pursuit of goals and the selection of means always occurs within situations which influence the course of action.
The actor makes certain assumptions concerning the nature of his goals and the possibility of their attainment.
Action is influenced not only by the situation but by the actor's knowledge of it.
The actor has certain ideas or modes of cognition which affect his selective perception of situations.
The actor has certain sentiments or affective dispositions which affect both his perception of situations and his choice of goals.
The actor has certain norms and values which govern his selection of goals and his ordering of them in some scheme of priorities

p.181 To explain social behaviour we really have very little alternative to looking at men's values, beliefs, and situations, and if the action approach reminds us of that it is doing a good job.