[2] According to Equity Theory, in order to maximize individuals' rewards, we tend to create systems where resources can be fairly divided amongst members of a group.
[citation needed] Partners do not have to receive equal benefits (such as receiving the same amount of love, care, and financial security) or make equal contributions (such as investing the same amount of effort, time, and financial resources),[citation needed] as long as the ratio between these benefits and contributions is similar.
[citation needed] Referent comparisons: Inputs are defined as each participant’s contributions to the relational exchange and are viewed as entitling them to rewards or costs.
[14] Inputs in this context include the employee’s time, expertise, qualifications, experience, intangible personal qualities such as drive and ambition, and interpersonal skills.
Outcomes include monetary compensation, perquisites ("perks"), benefits, and flexible work arrangements which impact motivation, performance, and satisfaction of workers.
Scholars address the notion that intimate relationships also exemplify equity theory in action because partners evaluate the fairness of their inputs and outputs.
[18] Further, scholars state that equity theory explains that inequalities in the relationship can lead to feelings of distress and depression.
[21] Scholars have questioned the simplicity of the model, arguing that a number of demographic and psychological variables affect people's perceptions of fairness and interactions with others.
Furthermore, much of the research supporting the basic propositions of equity theory has been conducted in laboratory settings, and thus has questionable applicability to real-world situations.
Three archetypal classes are as follows: The Fairness Model proposes an alternative measure of equity/inequity to the relational partner or "comparison person" of standard equity theory.
For instance, Gill and Stone in 2010 analyze how considerations of equity influence behavior in strategic settings in which people compete and develop the implications for optimal labor contracts.