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

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.