Social Exchange Theory at Work and Home

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The basic principle in all types of relationships involves the balance of exchange between giving and taking. This exchange is also known as the Social Exchange Theory. Social Exchange Theory is defined as, “ a theory hypothesizing that you develop profitable relationships and that you avoid or terminate unprofitable relationships.” This suggests people will evaluate all relationships to determine the benefits and pitfalls of the relationship. The theory is also based on an economic model of benefits and losses, whereas Profits=Rewards-Costs. Social Exchange Theory is helpful in interpersonal communication because it can determine an individual’s personal values and priorities. Therefore, the articles, “Deciding to Divorce Using Social Exchange Theory,” “Why I Am Leaving Goldman Sachs,” and “Employees With Flex Time Put in More Hours” support the understanding of this theory. As you see, the Social Exchange Theory claims that people create and develop relationships that can help them maximize their profits. It is a theory based on the economic model of profits and losses and it begins with the equation, Rewards – Costs = Profits. Rewards are any gain or benefit that would incur costs to obtain. Some examples of rewards are money, love, information, goods, services and more. Costs are things to normally avoid that may be considered difficult or troublesome. Some examples of costs are paying for someone, covering for someone, watching a movie you dislike with someone because they want to and etc. Lastly, profits are the results you get from the relationship by subtracting costs from rewards. The theory claims that people seek for relationships that may give them the greatest profits and they do so by having comparison levels. Comparison level is an idea we have in mind of what kind of rewards or profits we can get out of from a certain type of relationship. People

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