We do not Calculate Values of Relationships

Looking out, Looking in talks about the different aspects of relationship formation, maintenance, and dissolution. One area I find to be oversimplified is the discussion of the “social exchange theory” of relationships. The formula presented is Rewards – Costs = Outcome, which suggests a self-interested basis for relationship: if I think the rewards of interacting with you are greater than the costs, I will do it; otherwise, I won’t. While there certainly are self-interested people that behave this way, most people do not. Since the example suggests it is a ‘semi-economic model’, we’ll look for more evidence from economics. It turns out that through prisoners dillema games and other set ups, economists have been probing the nature of human interactions for a while. A consistent pattern of behaviour emerges that suggests that the equation presented above is inaccurate. “People repay gifts and take revenge even in interactions with complete strangers, even if it is costly for them and yeilds neither present nor future material rewards” (The economics of reciprocity).

An experimental example of reciprocity is a trust game where the experimenter gives X dollars to a Proposer; the Proposer can then give as much of that as they like to a third party, the Responder. If the Responder refuses, neither gets money. The formula above would suggest that the Responder would never refuse the money, because the cost is always 0 to accepting the lower amount, and the Proposer would always offer a very inequitable distribution, as his reward diminishes proportionally to his exchange. Nonetheless, the Responder almost always refuses the amount if it is “too low”, and the Proposer almost always offers 40-50% of the amount.

It seems that a reciprocal model of relationship is more accurate than an exchange theory model; whatever theories we use to explain why people form and maintain relationships, we are probably mistaken if we assume that the reason is based on a cost/benefit analysis.

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