SOCIAL EXCHANGE: PREDICTING TRANSACTIONAL OUTCOMES IN FIVE-EVENT, FOUR-PERSON SYSTEMS

H, ANDREW MtcHENER, EUGENE D , COHEN AND AAGE B , S0RENSEN University of Wisconsin, Madison Atnerican Sociological Review 1977, Vol. 42 (June):522.-.535 This paper reports an experimental test of Coleman's theory of social exchange. The theory utilizes information on interest iX) and initial control (C) to make predictions concerning the value of events (V), the resources of persons (Rj, and the pattern of control at eguilibrium (C*). The experimental paradigm, which incorporates three distinct five-event, four-person exchange systems, shows that the theory's predictions are highly accurate for V, R and C*. Competitive goodness-of-fit tests demonstrate that Coleman's theory surpasses alternative theories based on less input information. The findings substantiate previous tests of Coleman's theory conducted on smaller exchange systems.

Iti ati earlier paper, Michetier, Cohen atid S0retisen (1975) reported the first experitnetital test ot Coleman's (1972) theory of social exchange. That test, while limited to small exchange systems involving four events and three persons, offered very encouraging results and showed that Coleman's theory was more accurate than several competing models, Coleman's theory is intended to be highly general (i,e,, to apply to any pure exchange system of m events and n persons). The theory's adequacy in this respect cannot be accepted on assumption, however, because social systems grow in complexity as they increase in sizea fact which makes the task of prediction more formidable. The present paper, therefore, reports a further experimental test of Coleman's theory, utilizing five-event, four-person exchange systems. Since these systems are virtually twice the scale and complexity
This study was supported by Grant 120365 from the Research Committee of the University of Wisconsin. Data analysis at the Madison Academic Computing Center was made possible through support, in part, from the National Science Foundation. The authors express their appreciation to Thomas Geissler and Allen Beck for assistance in data collection, and to lames S. Coleman, G. William Walster and Martha R. Burt for valuable suggestions on the research procedures. Responsibility for any errors or deficiencies in this rport rests, of course, with the authors.

of those in the earlier test, data from the present study constitute evidence on the generality of Coleman's framework. Moreover, the data provide a basis for additional tests against alternative models. Before reviewing Coleman's theory per se, it is useful to consider the general issues posed by exchange systems. In his classic statement on bilateral trade nearly a century ago, Edgeworth (1881) identified the key concepts for any exchange system and expressed the problem in formal terms. Any market system includes persons, who conduct transactions with one another, and it also includes events, which are commodities or services traded by the persons, Edgeworth noted that prior to the occurrence of any transactions, each person controls some portion of the tradeable events; additionally, each person has an interest in some or all of the events in the system. To understand the issues posed by such a system, consider a concrete example. Assume there are four persons (i.e., Alex, Bernard, George and Dan) participating in an agricultural market consisting of five tradeable events (i.e., tomatoes, onions, plums, lemons and avocados). Assume that the system includes a total of 1,000 tomatoes, 300 onions, 200 plums, 800 lemons, and 400 avocados, and that control of these events is distributed as depicted in Table 1, The control matrix (C matrix) in Table

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SOCIAL EXCHANGE
Table 1. A Simple Agricultural Marlcet Interest Matrix (X) tomatoes onions plums lemons avocados Alex Bernard George Dan 0 .8 .3 .3 .3 .1 0 0 .1 .1 0 0 0 0 .4 .5 .6 0 .3 .2 tomatoes onions plums lemons avocados Control Matrix (C)

523

Alex Bernard George Dan .6 .1 ,3 .5 0 .2 .7 0 .5 .6 0 ,1 ,4 0 .2 .2 ,1 .3 0 ,2

1 indicates that, before any trades occur, Alex controls ,6 (i.e., 600) of the tomatoes, ,1 (30) of the onions, ,3 (60) of the plums, ,5 (400) of the lemons and none of the avocados, Bernard controls ,2 (200) of the tomatoes, ,7 (210) of the onions, none of the plums, ,5 (400) of the lemons and ,6 (240) of the avocados. George controls no tomatoes, ,1 (30) onions, ,4 (80) plums, no lemons, and .2 (80) avocados, Dan controls the rest. Note that control of any event sums to 1.0; thus, each person's control over an event represents that proportion of the commodity he owns (ranging from 0.0 to 1,0), In addition to exercising control over the various events, persons also have interest in these events. The interest matrix (X matrix) in Table 1 details the extent to which each person has some interest in each of the four events. Interest is expressed in terms of the proportion of a person's total interest ranging from 0.0 to 1,0; that is, a given person's interest sums to 1,0 across all events. This conception of interest is analogous to a budget, in which a person allocates his purchasing power across various events in accordance with their importance to him. The more interest a person has in a given event, the more willing he is to commit his resources to obtain control over the event. As shown in Table 1, Alex has no interest in obtaining tomatoes or lemons, but he does have a .3 interest in onions, a ,1 interest in plums and a .6 interest in avocados. In other words, Alex has a large interest in avocados and a lesser interest in onions and plums. Bernard has a strong interest in tomatoes (,8) and a lesser interest in onions (,1) and plums (.1). George has approximately equal interest in tomatoes (,3), lemons (.4) and avocados (.3).

Dan has a prime interest in lemons (.5) and a minor interest in tomatoes (.3) and avocados (.2), One might expect this situation to foster a series of trades, because the four persons don't have what they want and don't want what they have. The market system is in disequilibrium, and all persons can improve their positions by exchanging commodities with one another. This simple example poses an important research question: After all trades have occurred, who will control what? That is, how much of the variotis events will be owned by each of the traders after all transactions? As emphasized by several writers (Edgeworth, 1881; Homans, 1961; Newman, 1965; Rapoport, 1970), this is the fundamental question to be answered by any exchange theory, A second question posed by the example is: What is the value of each of the events in the exchange system? In other words, what is the relative "price" of each event? Since the traders have greater interest in some events than in others, one may ask which of the various commodities will command the highest price. Although of lesser importance than the issue of control after trading, this question has interested some theorists (Newman, 1965; Rapoport, 1970) and must be addressed by any general theory of exchange, A third question is: What is the relative power of each of the persons in the exchange system? Since the traders begin by controlling different amounts of the various events and since these events differ in value, it follows that some traders will enjoy a more advantageous position than others. Various theorists CThibaut and Kelley, 1959; Tannenbaum, 1962; Blau, 1964) have addressed the origins of power in so-

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AMERICAN SOCIOLOGICAL REVIEW The remainder of this paper first will describe the experimental procedures and report the findings. Next, it will detail Coleman's (1972) theory of social exchange and derive the relevant predictions. Finally, it will test goodness-of-fit to determine how well the theory's predictions match the empirical observations.

cial interaction, and it endures as an important issue. In order to construct predictive models, theorists as far back as Edgeworth have found it useful to make restrictive assumptions regarding the exchange processes. One common assumption is that all persons in the system have full information about interests and control over events before trades occur. In the context of the agricultural example, this would mean that Alex, Bernard, George and Dan each know what the others want and what the others control. Another typical assumption is that all traders are guided by rational self-interest and seek to increase their gains through exchange; thus, persons will enter a trade only if it yields an increment in utility, A third assumption is that persons' interests are stable and not subject to change midway through trading. A fourth assumption is that events are divisible. In the previous example, the events meet this assumption; the event "tomato," for instance, can be divided to one part in 1,000 (since there are 1,000 tomatoes in the exchange system), while the event "onion" can be divided to one part in 300, etc. While these assumptions are restrictive, they typify those made by many exchange theorists (e.g., Edgeworth, 1881; Newman, 1965; Rapoport, 1970; Coleman, 1972). Unfortunately, the stringency of these assumptions has hampered empirical assessment of exchange theory predictions, for virtually no markets found in natural settings meet all these conditions. Even relatively "pure" markets such as the commodity markets or the stock exchanges fail to satisfy the assumptions of full information and stability of interest. It is possible, however, to create an experimental situation that meets the assumptions of exchange theory. In earlier work, Michener, Cohen and S0rensen (1975) established an experimental market paradigm involving four-event, three-person systems. The present research extends this paradigm to five-event, four-person systems. Systems of this size are substantially more complex than those used in the earlier research, and they afford a good basis for further tests of Coleman's theory.

METHOD

Procedures Subjects in the present study were 144 male undergraduates at the University of Wisconsin. For their participation, subjects received $1,00 plus whatever money they could earn during the experiment. The subjects comprised 36 four-man groups, which were the units of analysis. Twelve groups were randomly assigned to each of three experimental treatments (termed Configuration 1, Configuration 2 and Configuration 3). After arriving for the experiment, subjects entered a room containing a large square table. The four positions around the table were designated by name cards (Alpha, Beta, Gamma, Delta), and the experimenter randomly assigned subjects to these roles. During the experiment, subjects were free to talk with one another. Use of the Alpha, Beta, Gamma and Delta labels, rather than the subjects' own names, insured relatively impersonal and businesslike interaction. Seated around the table, subjects read an instruction sheet that described the basic situation. This explained that subjects would be trading colored chips, which constituted the exchangeable events in the system. These colored poker chips (red, white, blue, yellow and green) appeared on the table in full view of all subjects. In total, there were 500 chips, 100 of each color. Before the trading began, each subject received another sheet of paper indicating the traders' interests and initial control over chips. Each person was staked to a given number of chips, which were piled directly in front of him on the table. The actual number of chips received by a sub-

SOCIAL EXCHANGE ject depended both on the role he occupied (Alpha, Beta, Gamma or Delta) and on the experimental treatment (Configuration 1, 2 or 3) to which his group had been randomly assigned. The patterns of interest and initial control for the three experimental treatments are depicted in Table 2. For example, in those groups assigned to Configuration 2, person Alpha initially controlled .6 of the red chips, .1 of the white chips, .3 of the blue chips, .5 of the yellow chips and none of the green chips. In other words. Alpha had 60 red, 10 white, 30 blue, 50 yellow and 0 green chips. Beta had 20 red, 70 white, 0 blue, 50 yellow and 60 green chips. Gamma had 0 red, 10 white, 40 blue, 0 yellow and 20 green chips. Delta had 20 red, 10 white, 30 blue, 0 yellow and 20 green chips. Subjects understood that although some traders controlled more chips than others, they were to do their best with whatever they had. Each subject received a sheet of instructions indicating how much interest the various traders had in each color chip. Interest was operationalized in terms of tenths of a
Table 2, Experimental Configurations 1. 2 and 3 Interest Matrices (X) Red Alpha Beta Gamma Delta 0 .3 .3 0 White .9 .5 0 .8 Blue .1 0 0 0 Configuration 1 Yellow Green 0 0 .3 .2 0 .2 .4 0 Red White Blue Yellow Green Control Matrices (C) Alpha .6 .1 0 0 .4 Beta 0 0 .9 .6 0 Gamma 0 .8 .1 .4 0

525

cent, so that subjects could earn money by accumulating colored chips in which they had some interest. For example, in Configuration 2, person Alpha had .6 interest in green chips and he therefore received .6^ for each green chip he controlled at the end of all exchanges. Thus, if he controlled all 100 green chips when trading was completed, he would earn 60<( from these alone. Similar payoffs could be earned for the other chips, depending on the degree of interest. This payment procedure meant that the last chip gained (of a given color) was worth as much monetarily as the first chip gained (i.e., no diminishing marginal payoff). Note that the patterns of interest (X) and initial control (C) in Configuration 2 differ from those in Configuration 1 and Configuration 3. Configuration 2 depicts the same pattem as the earlier agricultural example with Alex, Bernard, George and Dan (compare Configuration 2 in Table 2 with Table 1). Configurations 1 and 3 are new. All three configurations were randomly sampled from a (hypothetically infinite) population of possible interest and

Delta .4 .1 0 0 .6

Red Alpha Beta Gamma Delta 0 .8 .3 .3

White .3 .1 0 0

Blue .1 .1 0 0

Yellow 0 0 .4 .5

Configuration 2 Green .6 0 .3 .2 Red White Blue Yellow Green

Alpha .6 .1 .3 .5 0

Beta .2 .7 0 .5 .6

Gamma 0 .1 .4 0 .2

Delta .2 .1 .3 0 .2

Red Alpha Beta Gamma Delta .6 .2 .9 0

While .2 0 0 .2

Blue .2 .4 .1 0

Yellow 0 0 0 .5

Configuration 3 Green 0 .4 0 .3 Red White Blue Yellow Green

Alpha .1 .1 .8 .4 .6

Beta .9 .5 0 .2

Gamma 0 .1 0 .2 .3

Delta 0 .3 .2 .2 0

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AMERICAN SOCIOLOGICAL REVIEW that point, they informed the experimenter via the intercom. He reentered the room, carefully tallied who possessed which chips, and administered a postexperimental questionnaire to assess the subjects' perceptions of the trading. Fixed Parameters As indicated above, exchange theories in general (and Coleman's theory in particular) are predicated on a set of explicit assumptions. At the operational level, these assumptions must be treated as fixed parameters. Care was taken in the present study to set fixed parameters in accord with theoretical assumptions. Self-interest motivational orientation. Perhaps the most critical (and limiting) assumption of exchange theory is that each trader pursues his own self-interest. This involves neither a moral assertion nor a presumption of plutolatry; rather, as Newman (1965) has emphasized, it is merely an assumption that traders use certain decision rules in deciding when to favor one potential trade over another. Meeker (1971) places self-interest in perspective by noting that persons can adopt any of several motivational orientations in face-toface interaction. In addition to self-interest, these include altruism, competition, group gain, equity, status congruity, reciprocity, etc. Consistent with the assumptions of Coleman's theory (1972; 1973: ch. 3), the present study instilled a self-interest motivational set and discouraged the adoption of other orientations. Written instructions urged a self-interested orientation by including such directives as "get the largest number of chips," "obtain the biggest profit," and "do as well as you can." Since most persons will not automatically adopt a purely self-interested stance in face-toface interaction, steps were taken to legitimate this orientation. First, subjects were informed they had been randomly assigned to roles (Alpha, Beta, Gamma, Delta); this eliminated status congruence as a criterion for trading. Further, eaeh subject realized that the others were adopting a self-interested orientation, and this legitimated his own self-interested stance and undermined any collective or group-gain orientation.

control patterns for five-event, four-person systems. The only restriction applied to the sampling of configuration matrices involved rounding off entries in the matrices to the first decimal point. Thus, subjects exerted initial control in terms of tens (0, 10,20, 3 0 , . . . , 90,100) and had interests expressed in terms ot tenths (0, .1, .2, .3, 9,1.0). Since Configurations 1, 2 and 3 differ among themselves, one would expect that the equilibrium pattern of control (after all trading) will be different for the configurations. This adds complexity, of cotu^e, but a general theory of social exchange must offer predictions for any possible configuration. Having received information on interest and control for their cotifiguration, the subjects began trading after the experimenter left the room. The experimenter was blind to all theoretical predictions, and his absence from the room precluded experimenter bias. Subjects were free to negotiate any trades they wished. The only stipulation was that all deals were to be two-way (i.e., between two traders); no three-way or four-way deals were permitted, although subjects could achieve complex deals by a series of two-way trades. The various groups (which could be monitored over an intercom system) differed greatly in the way they conducted exchanges. Some were amicable and jocular; others were tough and sarcastic. Some made only a few trades (involving large numbers of chips); others racked up more than 25 exchanges (involving only a few chips each time). The order and sequencing of trades differed from group to group and appeared to follow tio standard pattern. In several cases, a subject decided to conduct an auction for his chips; in other groups, subjects utilized complex mathematical calculations to determine what they considered a proper rate of exchange. When a transaction occurred, subjects literally exchanged chips. Thus, hundreds of chips changed hands during the experimental session. Equilibrium was reached when all subjects decided that they no longer wanted to trade or found that they couldn't promote any further trades with the other subjects. At

SOCIAL EXCHANGE Moreover, the instructions explicitly indicated that traders should not consider themselves in competition with one another; for example. Alpha's success as a trader should be assessed only in terms of his outcomes relative to those of the Alphas in other groups, not relative to those of Beta, Gamma and Delta in his own group. Finally, a pure equity orientation was minimized because the instructions defined "fairness" as "doing as well as you can for yourself." Expressed another way, the instructions espoused a norm of rational self-interest and outlawed other orientations commonly seen in face-to-face interaction. Subjects' responses to two questions on the postexperimental questionnaire indicate that these instructions accomplished their purpose. One question asked: "How motivated were you to obtain as many valuable chips for yourself as possible?" The other asked: "To what extent were you trying to get the largest profit possible for yourself?" The mean responses on ninepoint scales to these two questions were, respectively, X=7.29 and X=7.57, which indicate a very high level of self-interested orientation, especially for a face-to-face situation. Full information. Most exchange theories (including Coleman's) assume that all participants have full information regarding control and interest. This was fixed as a parameter in the present study, and all subjects operated with complete information. Since the colored chips were stacked in front of the subjects on the table and actually changed hands whenever a transaction occurred, al! subjects knew who controlled what at all times. Moreover, subjects had a sheet of paper detailing the interest matrix for their particular configuration. This specified each person's interest in each event, assuring that everyone's interests remained stable throughout the trading. A fixed pattern of interest obviates the use of certain power tactics (i.e., withdrawal and demand creation, as detailed in Michener and Suchner, 1972), which would otherwise affect the pattern of trades. Divisibility of events. The present frame-

527

work included five events (red, white, blue, yellow and green chips), each of which was divisible to one part to 100. This high degree of divisibility enabled the subjects to operate with substantial precision in establishing exchange rates among the five events. Outeome Measures This study incorporates three dependent variables; these parallel the three research questions raised in the introduction. Items on the postexperimenta! questionnaire measured subjects' perceptions of each trader's resources and each event's value. These measures will be symbolized R, (for "observed resources") and V^ (for "observed value"). The third dependent variable, the pattern of control over events after trading (symbolized C*o for "observed control at equilibrium"), was determined via direct observation of the chips. To measure resources, subjects rated each person (including themselves) in terms of four semantic difiterential scales. These scales were strong-weak, powerfulpowerless, potent-nonpotent and dominantsubmissive. Data from previous research (Michener and Cohen, 1973; Michener, Lawler and Bacharach, 1973) indicate that these scales measure resource position (as opposed to measuring other aspects of power such as aggressiveness or resistance). In the present study, a score was obtained for each person by summing the four items as rated by all four subjects, cubing the sum to sharpen the differences among persons, and then dividing that number by the total score for all persons. This procedure generates a vector of coefficients (R^) for the persons in the exchange system; these coefficients sum to 1.0. As in past research, these scores prove highly reliable, with a median Cronbach's alpha of .918 (computed across four perceivers for each of tour persons perceived). The value of events (as perceived by subjects) was measured on the postexperimental questionnaire by four semantic differential items: valuable-worthless, important-unimportant, sought after-not sought after, desirable-undesirable. Instructions directed each subject to rate each color

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AMERICAN SOCIOLOGICAL REVIEW theory, as will be seen below, is sufficiently general to do this.

chip in terms of its value and importance to all traders within the system and not just to himself. A value score was obtained for each event by summing the four items as rated by all four subjects, cubing the sum to heighten the differences among events, and dividing that total number by the total score for all events. This procedure generates a vector of coefficients (V,) for the events in the exchange system; the elements in the vector sum to 1.0. These scores prove highly reliable, with a median Cronbach's alpha of .887 (computed across four perceivers for each of five events). The third dependent variable is C*o, control over events after trading. (Note that the C*o matrix differs from the C matrix, which is the pattem of control before trading.) Since the colored chips changed hands during the trading, the experimenter could simply tally who had what chips when trading was completed. He did this in full view of all subjects and then doublechecked for accuracy by reading aloud the amounts he had recorded. Because the subjects were paid according to this count, this procedure provided a measure of C*o that was virtually error-free. Entries in the C*o matrix were computed from the raw data by dividing by 100 the number of chips of each kind held by each subject. Thus, final control of a given event summed to 1.0 over all persons.

COLEMAN'S THEORY OF SOCIAL EXCHANGE

Coleman's (!972; 1973: ch. 3) theory pertains to any exchange system of m events and n persons, where persons have a fixed structure of interest in events (X) and an explicit pattern of initial control over events (C). The theory is based on the same assumptions introduced at the beginning of this paper and established as fixed parameters in the experimental setting. These assumptions include: (1) persons will strive to achieve their self-interest; (2) events are divisible; (3) all persons possess full information concerning the C and X structures. In Coleman's symbolism, the amount of initial control over event i by person j is represented by Cij, where 0=^Cij=51 and Cij=l. Since events are divisible, Cij represents the fraction of i over which person j has full control. The amount of interest that person j has in event i is represented by Xjj, where O^Xj, !S^1 and'i x,i=l. That is, xji represents the fraction of his resources that person j allocates (during trading) toward control over event i, independent of the total size of his resources and independent of the value of event i in the system. Coleman's theory defines resources for each person in the exchange system as follows:
rj= S

DESCRIPTIVE REStJLTS

Measures of the three dependent variables (R,, Vo, C*o) were obtained for each of the 36 four-man groups in the study. From these raw data, mean values for each of the three configurations were computed (12 groups per configuration). Table 3 presents the results (R,, V., C",,) for Configurations 1, 2 and 3. As might be expected, the results for any given configuration differ from those for the other configurations. The sheer complexity of the empirical data highlights the need for a theory to interpret the findings. The important task, of course, is to predict R^, V, and C*, not just for one configuration, but for all three. Coleman's

(1)

where rj is the resources held by person ), V, is the value of event i in the system, and Cij is the initial control that person j has over event i. Expressed in words, equation (1) says that the resources held by person j consist of the sum of initial control he has over all events, each event weighted by its value. Clearly, a person will hold a lot of resources if he has substantial control over a lot of events, provided these events are valuable in the system.

SOCIAL EXCHANGE
O O O >n O 5

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<s o r- o o\ o o o o -v

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AMERICAN SOCIOLOGICAL REVIEW dictions for the outcomes of Configurations 1, 2 and 3 appear in Table 4.
GOODNESS-OF-FlT

Coleman's theory defines the value of each event as:

v,= S

(2)

where v, is the value of event i in the system, rj is the resources held by person j , and x,i is the interest of person j in event i. Equation (2) says that the value of an event is the sum of interests in the event, each person's interest weighted by his total resources. This means that an event will be very valuable if many persons have a substantial interest in the event, provided they hold a lot of resources. Note that resources is defined in terms of value (equation [1]) and that value is defined in terms of resources (equation [2]). At first this may appear circular, but it is possible to achieve a simultaneous solution for these equations by using the fact that the total quantity of resources in the system sums to one (i.e., . rj=l) and the value of all events sums to one (i.e., ^ v,=l). The prime objective of exchange theory is to specify who will control what after trading has been completedin other words, to predict C*. Coleman's theory uses c*ij to symbolize the amount of control over event i that person j has at equilibrium (after trading), and it stipulates the equilibrium condition as: v,c*,j=r,xj,. (3) This equation says the exchange system win attain equilibrium when the amount of resources a person commits to control an event (r,xji) equals the value of full control over the event times the proportion of control he actually achieves (ViC'''ij). If this condition does not hold for all persons and all events, then at least two persons can benefit from further trading, and further exchange is predicted to occur until the equilibrium condition is reached. Given information on C and X and equations (1), (2) and (3) above, it is possible to derive predictions regarding R, V and C* for the three configurations used in the experimental situation. Coleman's pre-

How well does Coleman's theory predict the empirically observed outcomes (Re, Vo and C*o) for the three configurations? It is useful, first, to compare visually the empirical outcomes (Table 3) against the predicted outcomes (Table 4). Note the substantial correspondence between observations and predictions for resources (R) and for value (V). With the exception of one reversal for resources in Configuration 3 and two reversals for value in Configuration 2, Coleman's predictions closely match the data. Even more impressive is the correspondence between empirical observations and the predictions for C*. The match between observed and predicted coefficients is very close, with the only important reversals being the red chips in Configuration 1 and, possibly, the red chips in Configuration 3. This correspondence appears all the more striking when one remembers that Coleman's theory is making predictions for three different fiveevent, four-person systems. Goodness-of-fit for C* To obtain a more precise assessment of the theory's predictive capabilities, a test was performed for goodness-of-fit. First, a discrepancy index, d, was defined as the square root of the sum of the squared differences between observed and predicted values, i.e..

m n-1 S 2 i=l j=l

(c*,, -c,, Y

(4)

where c*[j^ is observed control (after trading) over event i by person j and c*ijj, is predicted control over event i by person j . ' This index reflects the discrepancy be1 Computation of the discrepancy index involved summation over m events but over only n-I persons. Since the rows in the C* matrix are constrained to sum to 1.000, the degrees of freedom in this matrix are limited to ( m ) ( n - l ) = ( 5 ) ( 4 l ) 15

SOCIAL EXCHANGE

531

o cs S

Mi

Is

2 -5

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AMERICAN SOCIOLOGICAL REVIEW this model takes initial control (C) as the best approximation of final control (C*). A third alternative model requires only information concerning interest (X). This elementary model predicts that final control (C*) is a function solely of interest in events. That is, it predicts that traders will achieve control over an event in proportion to their interest in that event; expressed formally, n
C*u=Xj,/ 2 Xjl.

tween data and theory; perfect correspondence between observed and predicted outcomes will yield an index score ot zero, while poor correspondence will yield a large positive score. Using Coleman's predictions, discrepancy scores were computed for each of the 36 groups in the experiment. Table 5 presents the mean discrepancy scores for C* in Configurations 1, 2 and 3. A comparison across configurations reveals that none of the means are equal to zero, indicating some difference between observations and predictions. An obvious question is: Does Coleman's theory predict the data better than simpler alternative models? This is an important issue because Coleman's theory poses large initial-information requirements; that is, it requires knowledge of both the C and X matrices to make predictions regarding C*. In many naturally occurring exchange situations, either the C matrix or the X matrix (or both) is unknown or only partially known. If an alternative model requiring less information proves as efficient as Coleman's in predicting outcomes, that model would be preferred. Three alternative models with low information requirements will be considered here. The first is an elementary baseline model that needs only initial information on m (the number of events) and n (the number of persons). This model predicts that each person will control an equal proportion of each event after trading (that is, c*,j=l/n). Although extremely simple, it can be interpreted in substantive terms as an equalitarian model in which traders are predicted to share all outcomes equally. A second alternative requires information regarding the initial C matrix as input, ft predicts simply that c*ij=Cij. fn other words, in the absence of information on X.

j To ascertain the predictive adequacy of these three alternative models, discrepancy scores (equation [4]) were computed for each model on the 36 groups in the study. The mean discrepancy scores for these models (i.e., equalitarian, C-only, proportionate interest) are presented in Table 5. To test Coleman's theory against the three alternatives, the discrepancy scores were analyzed in a 3 (configurations) x 4 (theories) split-plot factorial analysis of variance (cf. Kirk, 1968:248-83). Each group was nested within one of the three levels of the configuration factor (i.e., 12 groups per configuration). The repeated measures factor (theory) was crossed with configuration. Results indicate that the difference between theories is statistically significant, F (1,33)=555.44, p<.01. There is no significant main efEect of configuration, F(2,33)= 3.17, n,s,, but the data show a significant configuration x theory interaction, F(2,33)15.27, p<.01, on the discrepancy scores.^ Because this analysis involved repeated measures over four theories for each of the 36 groups, the Geisser-Greenhouse correction for dependency of observations has been applied to all Ftests reported here. This correction is extremely conservative. Computational procedures are identical to those of a conventional test except that

Table 5. Mean Discrep>ancy Scores for Final Control (C*) Configuration Theory Coleman Equalitarian C-only Proportionate Interest 1 .8523 1.5049 2.2701 .8124 2 .6992 1,4704 2.1075 .8560 3 .6299 1.5154 2.1757 1.3820 Mean across Configurations .7272 1.4969 2.1844 1.0168

SOCIAL EXCHANGE This interaction results primarily from the diiTerential performance of the proportionate interest model (i.e., poorer performance in Configuration 3). Separate planned comparisons show that, across the three configurations, Coleman's theory fits the data better than the equalitarian model, ((33)=20.15, p<.01, better than the C-only model, r(33)=38.15, p<.01, and better than the proportionate interest model, r(33)=7.58, p<.01. (The critical values of all tests reported here have been adjusted conservatively to maintain an experimentwise error rate of .01.) These tests show that Coleman's theory is superior to several alternative models having lower information requirements. While Coleman's theory needs more initial information to make predictions regarding C*, its predictions are more accurate than those of the simpler models. This conclusion reinforces that of the earlier experimental test on smaller exchange systems (Michener, Cohen and S0rensen, 1975). Coodness-oj-Fit for V and R Beyond question, the most important test of Coleman's theory is that involving C*, the prime dependent variable. However, it is possible to conduct ancillary tests of Coleman's theory using the data on value (V) and resources (R). The empirical results (Vo and R, in Table 3) are based on measures known to be highly reliable and (in the case of the measure for R) to have the intended discriminant validity. These results are closely matched by Coleman's predictions (V,, and Rp in Table 4). With few exceptions, Coleman's theory predicts the rank-ordering of resources and value in all three configura-

533

tions. A comparison of Tables 3 and 4 reveals only one reversal for resources (Configuration 3) and two reversals for value (both in Configuration 2). Moreover, as shown in Table 6. the mean discrepancy scores for value, d=

m-1 S (V,,

2, and

for resources, d=

V, assume

relatively small magnitudes, indicating a close fit between the empirical results and Coleman's predictions. As a test of Coleman s predictions for value and resources, discrepancy scores were computed from tbe data for several alternative models based on less input information (m and n only, C only, X only). Results of comparative tests show that Coleman's predictions are superior in all cases for resources {p<.01) and for value

DISCUSSION

The present test, in conjunction with the research on smaller exchange systems reported in Michener, Cohen and S0rensen (1975), provides some empirical support for Coleman's theory. The theory performs nicely in predicting outcomes for the fiveevent, four-person systems treated here. Presumably, tbe theory would apply to even larger systems, although the present
^ The sole exception to this statement is an alternative model that treats value as proportional n to total interest: Vi=2 Xij/n. A test shows that

i
the degrees of freedom are reduced. For a detailed discussion of the Geisser-Greenhouse correction, see Kirk, t968:142-3. the mean discrepancy score (across configurations) based on predictions from this model does not differ significantly from that based on predictions from Coleman's model, /(33) = 1.26, n.s.

Table 6. Mean Discrepancy Scores for Value (V) and Resources (R) Configuration Variable Value (Coleman) Resources (Coleman) 1 .1304 .1882 2 .2046 .1218 3 .1503 .1954 Mean across Configurations .1617 .1685

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AMERICAN SOCIOLOGICAL REVIEW formation to another while continuing to "control" it himself. Do the predictions from Coleman's theory apply to commodities having this property or is a distinct theory required? While issues such as these remain open for future study, the conclusion from the present research is that Coleman's theory performs better than simple alternative models under the given fixed parameters. The theory is an important element in the study of interpersonal exchange, and future experimentation on exchange systems should adopt it as a starting point.
REFERENCES Blau, P. M. 1964 Exchange and Power in Social Life. New York: Wiley. Coleman, J. S. 1972 "Systems of social exchange." Journal of Mathematical Sociology 2:145-63. 1973 The Mathematics of Collective Action. Chicago: Aldine. Edgeworth, F. Y. 1881 Mathematical Psychics. London: Kegan Paul. Homans, G. C. 1961 Social Behavior: Its Elementary Forms. New York: Harcourt, Brace and World. Kirk, R. E. 1968 Experimental Design: Procedures for the Behavioral Sciences. Belmont, Ca.: Brooks/Cole. Meeker. B. F. 1971 "Decisions and exchange." American Sociological Review 36:485-95. Michener, H. A. and E. D. Cohen 1973 "Effects of punishment magnitude in the bilateral threat situation: evidence for the deterrence hypothesis." Journal of Personality and Social Psychology 26:427-38. Michener. H. A., E. D. Cohen and A. B. S0rensen 1975 "Social exchange: predicting interpersonal outcomes in 4-event, 3-person systems." Journal of Personality and Social Psychology 32:283-93. Michener, H. A., E. J. Lawler and S. B. Bacharach 1973 "Perception of power in conflict situations." Journal of Personality and Social Psychology 28:155-62. Michener, H. A. and R. W. Suchner 1972 "The tactical use of social power." Pp. 239-86 in J. T. Tedeschi (ed.). The Social Infiuence Processes. Chicago: Aldine-Atherton. Newman, P. 1965 The Theory of Exchange. Englewood Cliffs, N.J.: Prentice-Hall.

data do not isolate the limits of applicability. Beyond the question of size, one must note that Coleman's theory is predicated on several strong assumptions. The present study purposely incorporated these assumptions as fixed parameters, but it remains for future research to determine whether the theory will predict adequately if these parameters are relaxed. Several assumptions deserve special attention. First, one may ask what happens to the theory's predictive power when traders operate without complete information regarding control (C) and interest (X). Situations of imperfect information give rise to inefficiency; they also provide an opportimity for certain power tactics, such as feigned withdrawal and extension of the power network (Michener and Suchner, 1972). Coleman's theory certainly will be less applicable when traders have only partial information, but the important issue is how much less apphcable. By experimentally varying the degree of info -nation held by traders, future research could determine the theory's sensitivity to this parameter. Second, Coleman's theory assumes that persons act in their own self-interest. Empirical researchers recognize that while persons are capable of adopting a selfinterested orientation, they can also adopt other motivational sets such as altruism, equity, status congruence, competition, etc. Informal experimentation by the present writers suggests that Coleman's theory is sensitive to relaxation of this parameter and that it loses some of its predictive capacity when subjects adopt other orientations (such as equity). The important question, of course, is how much predictive power is lost when traders adopt other motivational sets? Third, Coleman's treatment of control implies that when a person trades an event, ownership is completely forfeited to another person. This is a reasonable assumption for material goods, but it does not apply readily to other commodities such as information. As Rosen (1966) has observed, a person can trade (or give) in-

SOCIAL EXCHANGE
Rapoport, A. 1970 N-Person Game Theory. Ann Arbor: University of Michigan Press. Rosen, S. 1966 "The comparative roles of informational and material commodities in interpersonal transactions." Journal of Experimental Social Psychology 2:21126.

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Tannenbaum, A, S. 1962 "An event-structure approach to social power and to the problems of power comparability." Behavioral Science 7: 315-31. Thibaut. J. W. and H. H. Kelley 1959 The Social Psychofogy of Groups. New York: Wiley.

The Rise and Fall of the Cyprus Republic

Kyriacos C. Markides Much has been written on the international politics affecting the island of Cyprus, but this is the first serious study of the internal dynamics of the Greek community that made foreign intervention in 1974 possible and successful. Markides shows why the intemal contradictions of the Cypriot social and poiiticai system and the popular reliance on the charismatic leadership of Archbishop Makarios prevented the growth of viable governmental and political structures that could have offered effective resistance. "A historical, sociological analysis of the major community in a country which, though smaller in area than Connecticut and containing only slightly over half a million people, tragically occupies a crucial position in the geography and power politics of the Eastern Mediterranean."Leonard Doob $12.50

Yale University Press New Haven and London