Social Exchange Theory is a psychological concept that explains how people make decisions in relationships based on the costs and benefits they receive. It is a theoretical framework that helps us understand why people stay in relationships, what motivates them to leave, and how they weigh the pros and cons of different social situations.

What Is Social Exchange Theory?

Social Exchange Theory is a fundamental concept that explains how people interact with each other in social situations. It is based on the premise that people are rational beings who make decisions based on the perceived costs and benefits of their actions. In other words, people weigh the pros and cons of their interactions with others before deciding whether to continue or end them.

Social Exchange Theory can be applied to any social situation, from romantic relationships to business partnerships. It assumes that individuals have a set of goals they want to achieve, such as love, companionship, financial security, or power. To achieve these goals, individuals engage in social exchange by giving and receiving resources such as emotional support, material goods, time, or information.

The theory suggests that people evaluate the outcomes of their exchanges using three key criteria: rewards, costs, and alternatives. Rewards are positive outcomes that individuals receive from their interactions with others, such as love, respect, or money. Costs are negative outcomes that individuals experience during their interactions with others, such as stress or disappointment.

Alternatives refer to other opportunities for social exchange that an individual could pursue instead of their current situation. For instance, if someone is unhappy in a romantic relationship due to high costs and low rewards but believes they have better alternatives available such as being single or finding another partner.

How Does Social Exchange Theory Work?

To better understand how Social Exchange Theory works let’s take an example where John and Mary are two friends who help each other out regularly. In this case:

According to Social Exchange Theory, John and Mary are engaging in social exchange by giving and receiving resources. In this case, John gives his time and physical labor to help Mary move into her new apartment, while Mary gives her knowledge and expertise to help John with his math homework.

Both John and Mary receive rewards from this exchange, such as feeling good about helping others or enjoying each other’s company. However, they also experience costs such as physical exhaustion or mental strain from the work they do.

To evaluate the outcomes of this exchange, John and Mary consider their alternatives. For instance, if John believes that he could have spent his time more productively by studying for an exam instead of helping Mary move into her new apartment. In that case, he may feel like the cost of helping Mary was too high compared to its benefits.


Social Exchange Theory is a useful framework for understanding how people make decisions in social situations. It helps us understand why people stay in relationships that might not be beneficial for them or why they leave relationships even when they deeply care for someone else.

By evaluating the rewards, costs, and alternatives of social exchanges, individuals can make informed decisions about their interactions with others. This theory provides insight into how individuals weigh these factors when making decisions about romantic relationships, friendships or business partnerships.

Understanding Social Exchange Theory can help us build stronger relationships by being mindful of our own goals as well as those of the people we interact with. By considering the benefits we receive from these interactions against the costs we incur, we are better equipped to make decisions that lead to positive outcomes for everyone involved.