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Exchange, Network, and Rational Choice Theories
Sociological Theory

Chapter 12 Chapter Summary

This chapter focuses on three theories: exchange theory, network theory, and rational choice theory.

Exchange Theory

Exchange theory has its roots in behaviorism and rational choice theory. Behaviorism, taken from psychology, is concerned with how behavior is modified by its consequences, particularly how rewards and costs act as incentives or disincentives for various forms of behavior. Rational choice theory, which is derived from neoclassical economics, focuses on how actors seek to achieve their ends or goals in the face of limited resources and institutions. From this perspective, actors act purposefully to maximize their utility by rationally deciding upon courses of action appropriate for their resources within the context of various social institutions, which encourage or discourage various courses of action. These two theories were influential in the early stages of exchange theory.

The father of exchange theory, George Homans (1910 - 1989), dealt primarily with the psychological principles underlying social behavior. Although psychology was concerned primarily with individual behavior, Homans felt that the rules governing individual behavior were sufficient to explain all of social behavior. At the heart of his theory was the idea that people acted to maximize their rewards in their social action. Thus, the act of maximization usually involved an exchange with at least one other person, although this exchange need not be-and usually was not-monetarily based, but rather was the exchange of approval or disapproval, reward or punishment. Thus, the various ways in which actors may mutually reinforce various forms of behavior explain the hybridity of social action. Homans developed a number of propositions that help explain social behavior, taken by and large from behaviorism and rational choice. Taken together, Homans's theory creates an actor who is a rational profit-seeker, where profit may be considered anything that is viewed as positive for the actor, including the approval or positive reinforcement of others. The actor is rational to the extent that she/he chooses courses of action that have the greatest likelihood of producing desired results. Homans was criticized for not taking fully into account mental states, and for not being able to adequately explain large-scale social structures.

Peter Blau (1918-2002) also developed a version of exchange theory. Much like Homans, he attempted to use the rules that govern the relations between individuals and groups as the basis for understanding social structures. Blau developed a four-stage sequence that detailed the movement from "personal exchange transactions" through "differentiation of status and power" on to the "legitimization and organization," and into "opposition and change," thus detailing how "exchange" can lead to both social structures and social change. Blau also roots his actors in the rewards and penalties involved in social interaction, but gives more importance to social structures that emerge from interaction between actors. Blau felt that these social structures could affect the process of interaction itself. Blau also pushed the boundaries of exchange theory by dealing with two kinds of organizations-both those that were emergent from exchange and formal organizations, established to achieved specific objectives, such as firms or political parties. Lastly, Blau recognized the difference between large scale, complex social structures and small groups and asserted that different rules do in fact govern these collectivities. Social structures were governed by norms and values. He thought the "value consensus" within large collectivities was a form of indirect exchange among actors, actors who would otherwise not frequently exchange with every other member in the society or community.

Richard Emerson (1925-1982) also developed a version of exchange theory. Much as Homans and Blau attempted to move from micro-level interaction to macro-level structures, Emerson employs many of the same principles to make a similar move. However, he gives greater attention to sets of exchange relationships, which he calls exchange networks. These networks are dependent upon the possibility of the exchange of valued resources among all actors. Thus micro-level exchange can build large structures. The focus on valued resources and opportunities also allows Emerson to discuss power and dependency among actors.

Network Theory

In an attempt to move away from atomistic and normal approaches, network theorists look at the pattern of ties linking actors together. Actors here may be groups, corporations, or even societies, and they may be bound together by various forms of bonds, such as "strong" or "weak" ties. Although network theory is still in its relative infancy, it does have a number of guiding principles that specify how ties work, how stratification develops within the network, and how collaboration and competition emerge.

Network Exchange Theory

Network exchange theory combines elements of both exchange and network theory. It attempts to merge the strong model of structure in network theory with the strong model of relations between actors in exchange theory. Network exchange theory thus strengthens network theory's weak view of agency and exchange theory's weak view of structure. Network exchange theory looks at exchanges within the context of networks of exchanges, with particular attention paid to the structural dimension (size, shape, connections) of the network within which exchanges take place. Much like exchange theory, it pays considerable attention to power in exchanges, as well as dependency and vulnerability. Network exchange theorists identify two different types of networks: strong and weak power networks. These are based on whether actors can be excluded from exchanges, as well as the presence of strong and weak actors. Network exchange theory thus can predict the distribution of resources across the network, depending on the strength of the network and the strength of the actors who make up that network. Considerations such as these provide one of the greatest benefits of combining network and exchange theory: an expanded notion of agency that takes into account power differentials between actors.

Rational Choice Theory

In sociology, the main proponent of rational choice theory has been James Coleman (1931-1995). Because of Coleman's focus on social theory as an agent of social change, he believes that the appropriate level for social analysis is at the micro, agent level. Coleman believes that individuals act purposively towards their desired goals, usually acting to maximize their utility, with their goals and utilities shaped by values or preferences. Although he admits that actors are not always rational, he feels his predictions would be the same regardless of their rationality.

While Coleman focuses on the micro-to-macro link, the movement from individual-level behavior to the behavior of a system, he was also concerned with the macro-to-micro connection, or the ways in which structures shape behavior, and the micro-to-micro link, or how the behavior of individuals affects the behavior of other individuals. Three weaknesses in this approach are apparent: (1) it privileges the micro-to-macro issue, and thus does not pay enough attention to the other linkages; (2) it ignores the macro-to-macro issue; and (3) the causal arrows flow in only one direction, thus underestimating both feedback within relationships and the dialectical relationships between levels.

Coleman attempts to build from micro-level action into macro-level phenomena, but doing so in a way in which the conception of the actor remains constant across various macro-level phenomena. Coleman sees the granting of authority and rights from one individual to another as a basic building block in macro-level phenomena. This subordination creates a "structure" rather than just two interacting individuals, thus allowing for the possibility that individuals might maximize the interests of others, or of a group. Coleman uses a similar perspective in trying to explain more chaotic macro-level phenomena, which result from the unilateral transfer of control of an individual's action from one individual to another. Because the transfer is unilateral, the careful balancing act between individuals does not occur, and a stable system equilibrium does not emerge.

Other systems are stable because norms develop. For Coleman, norms are created when individuals give up control over their own behavior but gain some control over others in the form of the rules governing behavior. Thus, these individuals see some purpose in regulating behavior in some way. Coleman believed that norms were effective only to the extent that a consensus existed that some individuals have the right to control the behavior of others and that a mechanism existed to enforce the consensus. Norms, then, are macro-level phenomena that emerge from purposive micro-level interactions.

Coleman distinguishes between individual actors, who wish to maximize their individual interests, and corporate actors, who act on the behalf of some group or collectivity. Within any collectivity, both may be acting simultaneously, leading to resistance to the authority of the collectivity. Because of the importance of collectivities to modern life, Coleman sees a shift from primordial structures, such as families, towards corporate structures, understanding that the ramifications of cross-purposes that exist between individual and corporate actors are crucial for rational choice theory.

Ultimately, Coleman wishes to move away from homo sociologicus, or a view of actors and action as structurally dependent, and towards homo economicus, a view of actors who have the ability to act both in cooperation with, and despite of, structures.


Rational choice has faced a wide array of criticisms. For instance, critics argue that it: (1) neglects to specify causal mechanisms; (2) promotes an inadequate psychological reductionism; and (3) advocates a perspective that leads only to blind alleys. Some have reacted to the hubris of rational choicers (who have voiced a desire to replace other forms of theory), given that much of it is anathema from their perspective. Rational choice has also been criticized for ignoring culture and for decomposing into incoherence and tautology.