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Exchange principle

 

Principles > Exchange principle

Principle | How it works | So what

 

Principle

if I do something for you, they you are obliged to do something for me.

How it Works

Have you ever had someone come up to you in the street and give you something, perhaps a flower or even a book? How kind. But then they ask for a donation to their cause, and you feel that as they have given something to you, then you really ought to give something back.

Value exchange

Exchange is a game of balance. I help you then you help me then I help you, and so on.

What we exchange is not so much distinct things as perceived value. If I have something that I do not value very highly but you do, then it is a useful thing for exchange.

Exchanges are not necessarily financial or physical in nature. Emotional exchanges, which we use a great deal of the time, can be of surprising value. When I take my daughter to a pop concert, a smile and a hug is more than adequate payment. A simple thanks is all many want for much of their hard work on behalf of others.

Trust = delayed exchange

A simple definition of trust is 'delayed exchange'. I will do something for you today without asking for something in return. I must thus trust that you will repay the favor some time in the future. 

Without trust, exchange is confined either to an immediate exchange or else a trusted third party must be utilized. Third party 'trust brokers' are more common than might be imagined. For example, a major function of banks, lawyers and friends are to act between us and others who we may not trust.

Social pressure

Breaking the exchange principle in a group can be a heinous crime, punishable by ostracizing or even expulsion. The fear of such penalties is more than enough to keep many people on the straight and narrow.  

The bank account

Exchange is something like a bank account. Sometimes I put things in, sometimes I take things out. I can thus invest in helping others today so I know I can call on them in my hour of need.

Social capital

The idea of social capital is that when there is a high level of trust within a social group (which can be a large as an entire country), then we will help people we do not know, in the confident knowledge that others who we do not know will also help us. It is like we all have one big joint bank account.

We may need some help with the trust thing in such situations. What if someone takes advantage and asks for too much? This is where laws, trusted brokers and so on start to creep into the picture. 

The golden rule

The biblical Golden Rule says 'Do unto others as you would have them do unto you.' Oh look: exchange. And social balance. Although others might not like the same as us, it is a simple rule which guides many decisions in an equitable fashion.

Upsetting the balance

Exchange rules are based on long-term relationships, where the balance of exchange evens out over time. However, we are programmed by these rules to the point where we will obey them even in shorter-term and low-trust exchanges.

Give and take

If I give you something, then there is a social rule that says I can ask you for pretty much anything in exchange. Cults use this when they demand absolute obedience (and all the worldly wealth) of their devotees.

One of the tricks of unbalancing exchange is to make what you are offering very desirable, for example by using scarcity or other principles to jack up the value.

Number vs. quantity

If I do three things for you and you do something of equivalent value all in one go, does that make us even? Unfortunately not. The equations of exchange are not that linear. We often confuse quantity of occurrences with quantity of time.

So what

Companies and shops will give you free samples, which then encourages you to buy the full product in return.

Leaders will grant favors to their followers. These can be small strokes of attention in payment for what may be significant efforts. By giving out their attention in many, small packets, they can create a remarkable imbalance, yet still have their followers loving them unquestioningly.  

If you don't have enough Christmas cards, try sending cards to total strangers. A surprising number will send you one back (and even add you to their regular Christmas list).

Politics is rife with 'logrolling' and the exchange of favors. It is one reason why laws can get strangely convoluted as modifications to suit just a single person get woven into the wording.

A variation of this is used by sales people who make cold calls and (naturally) get rejected. After the rejection, they can ask to be recommended to someone else. They can then leverage the liking principle by saying to the next person 'John said that you would be really interested...'.

See also

Cialdini (1994) cites reciprocity as one of his six key persuasion principles. 

 

Obligation principle, Reciprocity Norm, Sequential requests, Pregiving

Theories about friendship, Theories about how we understand people, Theories about helping others

 

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