Equity theory proposes that employees seek fairness or equity between the inputs they contribute to their job and the outcomes they receive in comparison to others. Inputs include aspects like effort, skills, and loyalty, while outcomes are things like pay, benefits, and recognition. The theory states that employees will feel satisfied if they perceive their inputs and outcomes are equitable to others, but will experience inequity and its negative consequences if they perceive their outcomes are too low or too high relative to their inputs and those of others. The document outlines the concepts of equity, under-reward inequity, over-reward inequity, inputs and outputs, and consequences of inequity according to equity theory.