ABSTRACT
The performance of the Village Government was highlighted when Indonesian Corruption Watch (ICW) announced that misuse of the budget was the highest factor in corruption throughout 2017. ICW data showed that there were 98 cases of corruption in village administrations and 102 village heads being suspected. The budget is still a soft land for corruption. This phenomenon is a trigger to find out the actual social preferences of budget actors in preparing budgets and achieving budget performance. Limited financial capacity encourages the establishment of priority scale of government affairs where the government is required to choose and delay others. Exchange processes thought to arise when governments prepare budget and set budget revenue and expenditure. This paper seeks to see from the aspect of social exchange, how social exchange theory can be used to explain the phenomenon of budget misuse that still occurs and is able to form indicators to measure social preferences.
