Exchange- Rational Choice

Exchange rational choice theory is about the rational choice people are motivated to take or do things depending on what they perceive as the best for personal benefit.

• Exchange theory is about using rational choice in social interactions between two or more people. These are two theories that are interlinked.

• Exchange theory derives from economics rational choice theory and the study of relationships and exchanges. Individuals are believed to evaluate alternative courses of action to get the highest value at the lowest price in any transaction.

• The rational actor model assumes the actors cognitively weigh potential costs and benefits from the alternative exchange partners and actions.  

• The theory compares the legal price with funding alternatives, complies with law duties, and is considered appropriate for legal decision-making.

The key disciplines show the different degrees of interest where the direct exchange between two actors depends on one another.

A generalized exchange happens when more than two actors and the reciprocal dependence are indirect, and productive exchange can be seen when the actors participate in a manner to benefit (like co-authoring a book). 

Economists explain that the roots of social exchange begin with the assumptions of utilitarian economies, where social exchanges are connected to long-term social relationships within the communities.

Such exchange depends largely on contractual obligations rather than bonds between a group of people or individuals. 

Also, there is an emphasis on social structure in the given framework where exchanges operate, and the resultant structural change created through these processes distinguishes social exchange theory from a perspective in psychology and financial economics. 

The modern theories on global exchange for social investment claim in contract to the reciprocal relations mentioned in the classical theories, and the most contemporary theorists study exchange that is negotiated through explicit bargaining.