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The Hidden Costs of Whistleblower Protection

Author

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  • Wallmeier Niklas

    (Department of Economics, 14915 Universität Hamburg , Hamburg, Germany)

  • Promann Timo

    (Department of Economics, 14915 Universität Hamburg , Hamburg, Germany)

Abstract

We conduct a laboratory experiment to analyze the influence of whistleblower protection on the cooperative behavior between a manager and an employee. Before taking part in a trust game with her employee, a manager has the opportunity to embezzle money at the expense of a third party. The employee observes her decision and may trigger an investigation by blowing the whistle. The treatments vary with respect to immunity and anonymity for the whistleblower. We compare misbehavior, reporting, and cooperative behavior across the treatments. The results suggest that whistleblower protection could deter wrongdoing, but could also have a detrimental effect on cooperation in organizations if it increases the probability for whistleblowing.

Suggested Citation

  • Wallmeier Niklas & Promann Timo, 2025. "The Hidden Costs of Whistleblower Protection," Review of Law & Economics, De Gruyter, vol. 21(2), pages 535-560.
    • Handle: RePEc:bpj:rlecon:v:21:y:2025:i:2:p:535-560:n:1012
    DOI: 10.1515/rle-2024-0075
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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