Whistleblowing: Incentives and Situational Determinants

FAU - Discussion Papers in Economics, No. 09/2016

45 Pages Posted: 10 Aug 2016 Last revised: 10 Nov 2016

See all articles by Klaus Ulrich Schmolke

Klaus Ulrich Schmolke

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Law School

Verena Utikal

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Date Written: August 9, 2016

Abstract

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

Schmolke, Klaus Ulrich and Utikal, Verena, Whistleblowing: Incentives and Situational Determinants (August 9, 2016). FAU - Discussion Papers in Economics, No. 09/2016. Available at SSRN: https://ssrn.com/abstract=2820475 or http://dx.doi.org/10.2139/ssrn.2820475

Klaus Ulrich Schmolke

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Law School ( email )

91054, Erlangen
Germany

HOME PAGE: http://www.wr2.jura.uni-erlangen.de/

Verena Utikal (Contact Author)

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Schloßplatz 4
Erlangen, Bavaria 91054
Germany

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