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Rational choice-exchange theory

Video transcript
Voiceover: All right, so here we are going to talk about rational choice theory and exchange theory. Both center on economics. It has long been assumed that people are motivated by money. Get the most for your money, right? Then some sociologists theorized that people were motivated by is what is best for them in all their actions, and that their actions were shaped by their desire for more, rather than less, of something good. This led to the development of rational choice theory. The main assumption behind rational choice theory is the idea that everything people do is fundamentally rational. Rationality here means that a person is acting as if they were weighing the cost and benefits of possible actions so that they can maximize their personal gain. Rationality is a property of a series, or a pattern of choices, not an individual choice. So basically, people act in self-interest. They are driven by personal desires and motivated by personal goals. They calculate the costs and benefits of every action and choose the one with the best outcome for themselves. And how do we calculate the value of these actions? How do we know which anticipated outcomes will benefit us the most? Well, we look at the social resources being exchanged. Like time, information, approval, and prestige to determine the value of a possible action. Through the individual rational actions of people, rational choice theory assumes that you can explain complex phenomenon like social change and social institutions. Let's take a look at the three assumptions underlying rational choice theory. First is the assumption of completeness, which means that every action can be ranked. If there are three possible actions I can take, completeness means that none of the options have an equal value to me. A is preferable to B and B is preferable to C. And that C is not then preferable to A because that would be circular and irrational according to our definition. This leads to the second assumption: transitivity. This means that if we take a look at those three options I have, since A is preferable to B is preferable to C, then A is also preferable to C. It's like in math. A is greater than B is great than C, therefore, A is greater than C. The last assumption is called independence of irrelevant alternatives. That's just a big fancy way of saying that, if I suddenly have a fourth option, X, that it won't change the order of how I ranked the first three options. I already have A is better than B is better than C. If X is better than C but worse than B, B isn't suddenly going to be preferable to A. A is still my best option. These three assumptions result in a consistent, rankable set of possible actions. All right so now that we have an idea of rational choice theory, let's take a look at exchange theory. Exchange theory is an application of rational choice theory to social interactions. It looks at society as a series of interactions between individuals. And is often used to study family relationships, work relationships, partner selection, parenting and many other interpersonal interactions. These interactions are determined by weighing the rewards and punishments of every interaction. If the interaction results in approval, it is more likely to be repeated. Because social approval is a reward. But if the interaction results in a punishment, like social disapproval, it is less likely to be repeated. This may seem pretty obvious to you, that, you'll do something to get a reward, while you'll avoid something that will wind up in punishment. But this is the basic principle behind exchange theory. That the behavior of an individual in an interaction can be figured out by comparing the rewards and the punishments. Rewards can be social approval, recognition, money, gifts, or positive gestures, like a smile. While punishments consist of social disapproval, public humiliation, or negative gestures, like a frown. There are quite a few assumptions that exchange theory depends on. Let's see if I can get through these quickly and clearly. First off, people seek to rationally maximize their profits. Which means they seek rewards and avoid punishments, right? So, like when you were a kid, you behaved yourself so you could get a cookie after dinner instead of being sent to your room. Then is the assumption that behavior that results in a reward is likely to be repeated. Just like I mentioned before about rewarding interactions being repeated. But what is interesting is that exchange theory assumes that the more often some reward is available, the less value that reward has. Kind of like supply and demand, when supply is too high, the price goes down. Next it is assumed that interactions operate within the social norms. Keeps our frame of reference manageable. And just like rational choice theory, exchange theory assumes that people have access to the information they need to make rational choices. That's probably debatable, but for the sake of this theory it is assumed. It is also assumed that most human fulfillment comes from other people. The need for other people comes from the importance of interdependence and social exchange, but what makes this all even a bit more complicated is you have to assume that the standards people use to evaluate interaction to change over time. And that they are different from person to person. What is seen as a reward to one person might be a punishment to another person. Phew, all right, assumptions out of the way. So, we have these interactions that make up society, but exactly what kind of interactions are they? Well, central to social exchange are the concepts of self-interest and interdependence that guide human interactions. We form relationships in order to benefit ourselves and because we depend on other people to live. Most people in our modern society cannot be completely self sufficient. And by that I mean, we can't go off into the woods alone and expect to survive for any extended period of time. We analyze our interactions with other people and form relationships based on our own subjective interpretation of what the rewards and punishments of each interaction are. And we base our subjective ideas of our interactions on the social expectations of what behavior is acceptable. Which is in turn determined by society's rules, norms and values. There are, of course, criticisms of rational choice theory and social change theory. The first one that popped into my head was, seriously, do we really make rational choices? We often do things that aren't rational. For example, why do I eat Ramen noodles, when I know it's really not good for me, and I can make myself something that actually tastes better in the same amount of time? I'm not really sure how to answer that one. There's some people whose choices are limited by social factors like gender, or ethnicity or social class that pressures them to make a choice that isn't in their best interest. Against rational choice theory in specific, some critics asked that if people always seek to benefit themselves, why would anyone do something that benefits others more than themselves? It contradicts the main idea that people are motivated by what is best for them. Then there is the question of why some people follow social norms that cause them to act in the best interests of other people. Like, paying taxes or volunteering. The third main criticism is that, is it really possible to explain every single social structure by the actions of individuals? Critics of exchange theory dislike that it reduces all human interactions to a rational process of comparing pros and cons. It also tries to put the formation of relations into a linear process, but that isn't always linear. Critics point out that relationships can move backward or jump ahead. Rational choice theory and exchange theory attempt to explain society through individuals and interactions. They assume people make rational choices based on evaluating the rewards and punishments of interactions. And that behavior is guided by self-interest and interdependence.