Overpaid or Overworked? Cognitive and Behavioral Reactions to Inequitable Rewards1

Abstract

Although early studies support the equity theory prediction that increasing rewards for task performance enhance the effort devoted to the task, these findings may be challenged on a number of counts. Social exchange theory suggests, for example, that when rewards exceed what is felt to be equitable, the recipient may increase his perception of task difficulty and his estimate of what is a fair return for his efforts. In this case, there should be little need to devote increased energy to task performance. The present study, conducted in both Italy and the United States, supports this reasoning. Compared with equitably rewarded subjects, those rewarded by either 40% or 80% over their estimate of what was fair, altered both their perceptions of task difficulty and of a fair return. No performance differences were found.

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