Exchange rational choice theory has two parts. Rational choice theory: people are motivated to do things based on what is best for them. Exchange theory: this is an application of the rational choice theory onto societal interactions between individuals.
Rational choice theory and Exchange theory are both theories interlinked and based on economics. Sociologists used economics to underpin both theories, people are motivated by what is best for them, and their actions are shaped by their desire to have more of something good.
The rational choice theory assumes that every action is fundamentally rational, and the person acts by weighing the costs and benefits of each action to maximise their personal gain. Rationality forms a pattern it is not based on one choice or action. Sociologists shaped this to explain that people are driven by personal desires and goals in their actions through this cost-benefit, so the outcome benefits them the most.
The rational choice theory has three core assumptions:
- Completeness – each option open to an individual can be ranked, and one is more desirable in the outcome than another.
- Transitivity – the most preferential option is greater than all possibilities regardless of how they are ranked in terms of outcome.
- Independence – When presented with another option, it would not change the rank of the original options.
These three assumptions result in a consistent rankable set of actions by which a rational choice can be made.
The rational theory is important to understand exchange theory. Exchange theory is an application of rational choice theory to social interactions. Exchange theory treats society as a series of interactions between individuals such as those in a family, workplace or parenting so is micro-sociological in scale. These interactions by exchange theory are made by weighing the benefits and punishments of the interactions. For such interactions, if they have resulted in approval or reward that behaviour or interaction is likely to be repeated. In the converse, if the action is punished in social interaction, it is less likely to be repeated. This principle underpins exchange theory that the behaviour of an individual in social interaction can be predicted by comparing the punishments and benefits in response.
Exchange theory assumes that people will seek to maximise their profits by seeking rewards and avoiding punishments. It also assumes that behaviour that results in a reward is likely to be repeated, and the reward over time will have less value when repeated. Both exchange and rational choice theory also rely on the assumption that people have access to the information they need to make informed decisions on their behaviour when considering the benefits and drawbacks. These model also assume that the standards people use to assess an interaction can change over time and are different from person to person when working on individuals.
Both theories help explain social exchange and interdependence as humans rely on each other to live and benefit themselves. The subjective interpretation of rewards and punishment of our interactions help us form relationships and also form the parameters of societal norms.
Both theories, however, are dependent on the fact that people make rational choices and that we have all choices available to us which is not the case dependent on some key factors such as class, race and gender. It is also challenged by the actions of people who do not act in their best interest and follow social norms such as paying taxes or volunteering, which does not directly benefit them but others. It is also a very reductionist theory breaking down decisions to the simple weighing of pros and cons.
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• Rational choice theory is the theory that every action and behaviour a human undertakes done by considering the pros and cons of that interaction and that humans will always act in the manner which benefits them the most.
Rational choice theory underpins exchange theory.
• Exchange theory explores the idea that wherein social interactions rational choice theory is applied. That people will exhibit behaviours that benefit then and will repeat the behaviour based on positive feedback and interactions from others.
interdependence: the dependence of two or more people or things on each other
social exchange theory: a sociological and psychological theory that studies the social behaviour in the interaction of two parties that implement a cost-benefit analysis to determine risks and benefits
rational: being based on or agreeable to reason