In equity theory, what is important? A) Social comparison of ...

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In equity theory, what is important?
 
  A) Social comparison of rewards and efforts
  B) Equality of rewards
  C) Equality of efforts
  D) Absolute value of rewards

Question 2

Gale works for 2 hours and earns 30. Allison also earns 30, but for 3 hours of work. Equity theory predicts which of the following might happen when Gale and Allison become aware of each other's earnings:
 
  I. Gale will ask for a raise
  II. Allison will reduce her effort
  III. Gale will reduce her effort
  IV. Allison will ask for a raise
  V. Allison will perceive an inequity
  A) I and IV
  B) II only
  C) II, IV, and V
  D) All but IV
  E) I, II, and III

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Answer to Question 1

Answer: A
Explanation: A) Correct. This is because equity is based on workers' perceptions of fairness. Workers individually compare what they are getting out of the work relationship (outcomes) with what they are putting into the work relationship (inputs). The ratio is then compared to corresponding ratios of other individuals.
B) Incorrect. Equity theory does not require that all rewards be equal but rather the employees' perception of the relationship between efforts and rewards (or discipline) be fair.
C) Incorrect. Equity theory does not require that all efforts be equal but rather the employees' perception of the relationship between efforts and rewards (or discipline) be fair.
D) Incorrect. Equity theory does not consider the absolute value of rewards but rather the employees' perception of the relationship between efforts and rewards (or discipline) be fair.

Answer to Question 2

Answer: C
Explanation: A) Incorrect. Gale is already receiving more reward for her effort than Allison, so she will not be motivated to ask for a raise (option I).
B) Incorrect. Equity theory does predict that Allison will reduce her effort, because she senses an inequity due to Gale making the same amount of money with less effort. However, this is not the only correct option.
C) Correct. Equity theory predicts that Allison will perceive an inequity (option V) because she is making the same amount as Gail for more effort. She will also be motivated to reduce her effort (option II) to mitigate the inequity. She is also likely to ask for a raise (option IV) to make her compensation more equitable.
D) Incorrect. Allison will be motivated to ask for a raise (option IV) to make her compensation more equitable.
E) Incorrect. Gale is already receiving more reward for her effort than Allison, so she will not be motivated to ask for a raise (option I). Equity theory does predict that Allison will reduce her effort, because she senses an inequity due to Gale making the same amount of money with less effort. However, Gale will not be motivated to reduce her effort (option III) because she is already being compensated more for her time than Allison is.