Optimal Accomplice-Witnesses Regulation under Asymmetric Information

40 Pages Posted: 7 Sep 2012

See all articles by Salvatore Piccolo

Salvatore Piccolo

University of Bergamo, Compass Lexecon and CSEF

Giovanni Immordino

University of Salerno - Centre for Studies in Economics and Finance (CSEF)

Date Written: September 5, 2012

Abstract

We analyze the problem of a Legislator dealing with privately informed whistleblowers. We identify their incentives to release distorted testimonies and characterize the second-best policy limiting this behavior. The key finding is that there exists a positive externality between criminal earnings and the information rent granted to whistleblowers, which leads to partial disclosure. We also show that accomplices must fulfill minimal information requirements, that a bonus is awarded to those providing more corroborating evidence and that rewarding a self-reporting boss increases efficiency. Moreover, we identify a set of conditions under which partial disclosure weakens, and some where it instead exacerbates.

Suggested Citation

Piccolo, Salvatore and Immordino, Giovanni, Optimal Accomplice-Witnesses Regulation under Asymmetric Information (September 5, 2012). Available at SSRN: https://ssrn.com/abstract=2142940 or http://dx.doi.org/10.2139/ssrn.2142940

Salvatore Piccolo (Contact Author)

University of Bergamo, Compass Lexecon and CSEF ( email )

via de caniana 2
24127
Bergamo, BG 24127
Italy

Giovanni Immordino

University of Salerno - Centre for Studies in Economics and Finance (CSEF) ( email )

84084 Fisciano, Salerno
Italy

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