Whistleblowing: Incentives and Situational Determinants
FAU - Discussion Papers in Economics, No. 09/2016
45 Pages Posted: 10 Aug 2016 Last revised: 10 Nov 2016
Date Written: August 9, 2016
Law makers increasingly try to capitalize on individuals having acquired knowledge of corporate crimes or other misconduct by inducing them to blow the whistle. In a laboratory experiment we measure the effectiveness of incentives on the willingness to report such misconduct to a sanctioning authority. We find that fines for non-reporting insiders, rewards and even simple commands increase the probability of whistleblowing. We find the strongest effect for fines. Situational determinants also influence the willingness to blow the whistle: insiders who are negatively affected by the misconduct are more likely to blow the whistle than non-affected or profiting insiders. Those (negatively affected) victims are also sensitive to the misconduct’s impact on the authority sanctioning the misconduct (public authority or employer): whistleblowing is more likely if the enforcement authority is negatively affected compared to positively or not affected.
Keywords: whistleblowing; incentives; situational determinants; experiment
JEL Classification: C91, D82, K42, M59
Suggested Citation: Suggested Citation