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Social Exchange VS Market Exchange

For human beings, satisfaction equals perception minus expectation, and a few small unexpected rewards can have disproportionate effects.


The reason these small, unexpected rewards have such an impact is that people perceive them as a "social exchange" with the company versus a "market exchange."


To understand the difference, let's make a suitable analogy:


Let's say you're at your mother-in-law's house for Easter. She spent weeks planning meals and cooking all day. After the meal, you thank her and ask her how much you should pay for the experience.


What would her reaction be? Most people say their mother-in-law would be horrified and the relationship would be damaged as a result.


Why? The supply of money moves interaction from a social norm, built around a long-term reciprocal relationship, to a more transactional and superficial market norm.


Coming back to your mother-in-law, would she accept a nice bottle of wine or flowers as a gift from you? She probably would, as small and unexpected gifts in social norms are at play.


In conclusion, little signs of appreciation go a long way for making people feel recognised and valued, whether they are colleagues, friends or family.


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