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Corporate virtue: Treatment of whistle blowers and the punishment of violators


  • Arce, Daniel G.


An evolutionary game-theoretic model is employed to address three essential aspects of whistle blowing: ethical decision making, the duality of mutual accountability among cohorts in large organizations, and role conflict between individual and organizational values. I derive an equilibrium condition relating the treatment of whistle blowers to the punishment of violators. The model facilitates an evaluation of the whistle blowing provisions in the Sarbanes-Oxley (2002) Act.

Suggested Citation

  • Arce, Daniel G., 2010. "Corporate virtue: Treatment of whistle blowers and the punishment of violators," European Journal of Political Economy, Elsevier, vol. 26(3), pages 363-371, September.
  • Handle: RePEc:eee:poleco:v:26:y:2010:i:3:p:363-371

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    References listed on IDEAS

    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
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    5. Holler, Manfred J, 1993. "Fighting Pollution When Decisions Are Strategic," Public Choice, Springer, vol. 76(4), pages 347-356, August.
    6. Fudenberg, Drew & Maskin, Eric, 1990. "Evolution and Cooperation in Noisy Repeated Games," American Economic Review, American Economic Association, vol. 80(2), pages 274-279, May.
    7. Berentsen, Aleksander & Bruegger, Esther & Loertscher, Simon, 2008. "On cheating, doping and whistleblowing," European Journal of Political Economy, Elsevier, vol. 24(2), pages 415-436, June.
    8. Ross Cressman & Jean-Francois Wen & William Morrison, 1998. "On the Evolutionary Dynamics of Crime," Canadian Journal of Economics, Canadian Economics Association, vol. 31(5), pages 1101-1117, November.
    9. Kolstad, Ivar, 2007. "The evolution of social norms: With managerial implications," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(1), pages 58-72, February.
    10. Daniel G. Arce, 2007. "Is Agency Theory Self-Activating?," Economic Inquiry, Western Economic Association International, vol. 45(4), pages 708-720, October.
    11. Noreen, Eric, 1988. "The economics of ethics: A new perspective on agency theory," Accounting, Organizations and Society, Elsevier, vol. 13(4), pages 359-369, June.
    12. Sandeep Kapur, 2009. "An Economic Model of Whistle-Blower Policy," Journal of Law, Economics, and Organization, Oxford University Press, vol. 25(1), pages 157-182, May.
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    Cited by:

    1. Heinrich Ursprung, 2012. "The evolution of sharing rules in rent seeking contests: Incentives crowd out cooperation," Public Choice, Springer, vol. 153(1), pages 149-161, October.
    2. Daniel Arce, 2015. "Integrity, unprincipled agents and corporate governance reform," European Journal of Law and Economics, Springer, vol. 39(3), pages 539-551, June.


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