Startups frequently compensate employees through a blend of cash and equity, such as stock options or restricted stock units, which may translate into ownership stakes. For prospective employees, assessing job offers with equity components can prove to be a complicated task. In fact, in a recent research study we found a clear and consistent pattern among participants evaluating offers that included equity compensation: They appeared to perceive that a higher number of shares translated into superior compensation. This led them to be more willing to sacrifice cash compensation when offered a larger quantity of shares, even when the underlying value remained the same. Call it the equity illusion.