The Incidence of Exchange Networks

This paper advances a line of work on an expected-value model of social exchange, in which a power structure indicates opportunities for exchange and a sample space of exchange networks. When the probability distribution of the networks in this sample space is known, the expected-value model provides an excellent account of the distribution of benefits among actors in a variety of power structures. The model would be more elegant if it also predicted the probability distribution of exchange networks. Furthermore, in its current form, the model fails to account for the observed exchange payoffs in the Kite, a structure that has attracted considerable attention among exchange theorists. Here I advance the expected-value model by deriving the probability distribution of exchange networks from a simple process in which the probability of an exchange at time t depends on the value of an exchange at time t-1. I show that this approach addresses the anomalies posed by the Kite structure.