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An Economic Model of Whistle-Blower Policy

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  • Sandeep Kapur

Abstract

"Whistle-blowing" is an increasingly common element of regulatory enforcement programs and one that is encouraged by recent legislation in the United States and elsewhere. We examine how responsive regulators should be to whistle-blower tip-offs and how severe should penalties be for wrongdoers detected in this way. Competing psychological theories as to what motivates employees to become whistle-blowers are operationalized as alternative behavioral heuristics. Optimal policy depends upon the motives attributed to whistle-blowers--which of the theories you subscribe to--but is not in general characterized by maximal penalties nor routine pursuit of complaints, even when pursuit is costless. (JEL K42, K32) The Author 2008. Published by Oxford University Press on behalf of Yale University. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • 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.
  • Handle: RePEc:oup:jleorg:v:25:y:2009:i:1:p:157-182
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    File URL: http://hdl.handle.net/10.1093/jleo/ewm049
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    Citations

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    Cited by:

    1. repec:eee:jeborg:v:147:y:2018:i:c:p:58-75 is not listed on IDEAS
    2. Hilary Sigman, 2011. "Monitoring and Enforcement of Climate Policy," NBER Chapters,in: The Design and Implementation of U.S. Climate Policy, pages 213-225 National Bureau of Economic Research, Inc.
    3. Mechtenberg, Lydia & Muehlheusser, Gerd & Roider, Andreas, 2017. "Whistle-Blower Protection: Theory and Experimental Evidence," CEPR Discussion Papers 11898, C.E.P.R. Discussion Papers.
    4. Tajika, Tomoya, 2017. "Organizational Concealment: An Incentive of Reducing the Responsibility," Discussion Paper Series 667, Institute of Economic Research, Hitotsubashi University.
    5. Johannes Buckenmaier & Eugen Dimant & Luigi Mittone, 2016. "Tax Evasion and Institutions. An Experiment on The Role of Principal Witness Regulations," PPE Working Papers 0007, Philosophy, Politics and Economics, University of Pennsylvania.
    6. Jeffrey V. Butler & Danila Serra & Giancarlo Spagnolo, 2017. "Motivating Whistleblowers," CEIS Research Paper 419, Tor Vergata University, CEIS, revised 12 Dec 2017.
    7. Villena, Mauricio G. & Villena, Marcelo J., 2010. "On the economics of whistle-blowing behavior: the role of incentives," MPRA Paper 35917, University Library of Munich, Germany, revised 24 Mar 2010.
    8. Bartuli, Jenny & Djawadi, Behnud Mir & Fahr, René, 2016. "Business Ethics in Organizations: An Experimental Examination of Whistleblowing and Personality," IZA Discussion Papers 10190, Institute for the Study of Labor (IZA).
    9. 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.
    10. Yehonatan Givati, 2016. "A Theory of Whistleblower Rewards," The Journal of Legal Studies, University of Chicago Press, vol. 45(1), pages 43-72.
    11. Goeschl, Timo & Jürgens, Ole, 2012. "Explaining uniformity in rule design: The role of citizen participation in enforcement," International Review of Law and Economics, Elsevier, vol. 32(1), pages 166-177.

    More about this item

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

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