This paper advances a theoretical method that uses social exchange theory to explain the structure of social networks. I begin to develop this generic method through a specific application. Reformulating Blau’s (1964) model of social exchange to reflect the dynamic nature of interaction and the accompanying potential for opportunistic behavior, I demonstrate how social exchange may be formalized as a repeated game, and how game-theoretic models may be used to predict the stability of particular exchange network structures. The specific application offers some evidence of the fruitfulness of the generic theoretical method, providing an explanation for the strong, reciprocal relationships in the workgroup advice network observed by Blau (1955).

* Northwestern University