The Social Exchange Theory (SET) is a sociological concept that explains how individuals make decisions regarding their social relationships. It is based on the idea that people engage in social interactions with the expectation of gaining some form of reward or benefit.

What Is the SET?

The Social Exchange Theory posits that people seek to maximize their rewards while minimizing their costs in social interactions. This theory is widely used in sociology, psychology, and anthropology to understand human behavior. According to SET, individuals weigh the pros and cons of any given relationship or interaction before deciding whether to proceed with it.

How Is SET Used?

The Social Exchange Theory has a wide range of applications in different fields, including:

Social Relationships

SET provides a framework for analyzing and understanding social relationships between individuals. It helps to explain why people choose certain partners or friends over others and why they might stay in or leave a relationship.

For example, when deciding whether to start dating someone, an individual might weigh the potential rewards (e.g., affection, companionship) against the potential costs (e., time commitment, emotional stress). If the perceived benefits outweigh the perceived costs, they may decide to pursue the relationship.

Organizational Behavior

Organizations also use SET to understand employee behavior and motivation. According to this theory, employees are motivated by perceived rewards such as salary increases, promotions, recognition and benefits.

When employees feel that their contributions are not adequately rewarded or recognized by their organization, they may become demotivated and reduce their efforts. On the other hand, when employees feel valued and rewarded for their work, they are more likely to be satisfied with their jobs and perform better at work.


Economists use SET as a way of understanding consumer behavior. They look at how consumers weigh up the costs of purchasing goods versus the benefits they receive from them. This helps businesses understand how much they can charge for their products and what kind of promotions or incentives they can offer to increase sales.


The Social Exchange Theory is a useful tool for understanding human behavior in a variety of contexts. It helps us to understand why people make certain decisions in social relationships, organizational behavior, and economics. By weighing up costs and benefits, individuals are able to make informed decisions that maximize their rewards while minimizing their costs.