NEGOTIATED EXCHANGES IN SOCIAL NETWORKS

Network exchange theory predicts relative profits from negotiations among actors in Social exchange networks (Markovsky et al. 1993; Markovsky, Willer & Patton 1988). Here we extend the theory to allow exact predictions, rather than merely ordinal, for actors' exchange profits. This is accomplished by integrating two important factors. First, a resistance model predicts bilateral negotiation outcomes within a given set of network constraints. It does so by weighing actors' interests in gaining the best possible exchanges against their desires to avoid the worst. Second, the resistance model predictions are modified by actors' profit expectations. In particular, we incorporate two factors that affect such expectations, both common features of ongoing exchange relations: the number of other actors to whom one is directly connected in the network, and the likelihood of one's completing exchanges with them. We derive hypotheses from the theory and test them in two very different experimental settings. We find that the theory's predictions are more accurate than those of previous versions of the theory and those of five alternative theories.