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An individual will consider that he is treated fairly if he perceives the ratio of his inputs to his outcomes to be equivalent to those around him. Thus, all else being equal, it would be acceptable for a more senior colleague to receive higher compensation, since the value of his experience (an input) is higher. Example: If you own a home that's worth $60,000, but you only owe $30,000 on the mortgage, your equity is $30,000. If you owe $40,000 on the mortgage, then your equity is $20,000.

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