Final answer:
The equity theory does not support the idea that overpaying an individual will result in greater output. Instead, the efficiency wage theory suggests that paying employees slightly more than market conditions dictate can increase productivity and employee retention.
Step-by-step explanation:
According to the equity theory, overpaying an individual does not necessarily result in greater output.
Instead, it argues that workers' productivity depends on their pay, and employers may find it beneficial to pay their employees slightly more than market conditions dictate. This is known as the efficiency wage theory.
When employees receive better pay than others, they are motivated to work harder and stay with the current employer.
Additionally, employers prefer to pay workers a little extra to avoid the costs of training and hiring new employees. Thus, paying employees more than the market rate can lead to increased productivity and retention of skilled workers.