Karen graduated from college four years ago and has been working at Betaphy Inc. ever since. She has consistently received good performance evaluations for the quality of her work. She recently found out that her company hired a fresh college graduate with no experience at a salary higher than hers. Which of the following theories will Karen most likely use to evaluate this situation?

Equity.

Explanation:

The theory of equity was developed by John Stacey Adams in the 1960s and also known as Adam's equity theory.

According to the equity theory, there should be an equal and fair balance between the input and output of an employee. The inputs are referred to an employee skills, hard work, loyalty, commitment, etc whereas, out includes salary, benefits, etc. This theory not only evaluates equal distribution of input and output of an individual but also among a group.

In the given case, there is an unequal distribution of input and output between Karen and a fresh college graduate. It is because Karen has been working at Betaphy Inc. for more than four years and has contributed much to the company through her consistent good performance and quality. But the company has hired a fresh graduate with no prior experience at a salary higher than Karen. This unequal distribution will be evaluated based on the equity theory.

So, the correct answer is Equity theory.

lack of interest from state and local governments.