An Economic Model of Whistle-Blower Policy

Posted: 13 Apr 2009

See all articles by Anthony G. Heyes

Anthony G. Heyes

University of London, Royal Holloway College - Department of Economics

Sandeep Kapur

University of London - Birkbeck College; University of London - Economics, Mathematics and Statistics

Date Written: May 2009

Abstract

“Whistle-blowing” is an increasingly common element of regulatory enforcement programs and one that is encouraged by recent legislation in the United States and elsewhere. We examine how responsive regulators should be to whistle-blower tip-offs and how severe should penalties be for wrongdoers detected in this way. Competing psychological theories as to what motivates employees to become whistle-blowers are operationalized as alternative behavioral heuristics. Optimal policy depends upon the motives attributed to whistle-blowers - which of the theories you subscribe to - but is not in general characterized by maximal penalties nor routine pursuit of complaints, even when pursuit is costless.

JEL Classification: K42, K32

Suggested Citation

Heyes, Anthony and Kapur, Sandeep, An Economic Model of Whistle-Blower Policy (May 2009). The Journal of Law, Economics, & Organization, Vol. 25, Issue 1, pp. 157-182, 2009, Available at SSRN: https://ssrn.com/abstract=1372575 or http://dx.doi.org/10.1093/jleo/ewm049

Anthony Heyes (Contact Author)

University of London, Royal Holloway College - Department of Economics ( email )

Royal Holloway College
Egham
Surrey, Surrey TW20 0EX
United Kingdom
44-(0)1784 44-3907 (Phone)
44-(0)1784 43-9534 (Fax)

Sandeep Kapur

University of London - Birkbeck College ( email )

Malet Street
London, WC1E 7HX
United Kingdom

University of London - Economics, Mathematics and Statistics ( email )

7-15 Gresse Street
London, WC1E 7HX
United Kingdom
+44 20 7631 6405 (Phone)
+44 20 7631 6416 (Fax)

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