Equity theory states that individuals judge fairness in compensation by comparing their inputs and outcomes against the inputs and outcomes of referent others.

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Equity theory proposes that people evaluate fairness by comparing their inputs (i.e. effort, skills, experience) and outcomes (i.e. salary, benefits, recognition) to those of others they consider to be valid references or "referent others". This comparison can lead to feelings of equity or inequity, and may result in behavioral responses such as quitting or reduced effort.

Equity Theory States That Individuals Judge Fairness in Compensation by Comparing