Reporting Peers’ Wrongdoing: Evidence on the Effect of Incentives on Morally Controversial Behavior

I show that offering monetary rewards to whistleblowers can backfire as a moral aversion to being paid for harming others can reverse the effect of financial incentives. I run a field experiment with employees of the Afghan Ministry of Education, who are asked to confidentially report on their colleagues’ attendance. I use a two-by-two design, randomizing whether or not reporting absence carries a monetary incentive as well as the perceived consequentiality of the reports. In the consequential treatment arm, where employees are given examples of the penalties that might be imposed on absentees, 15% of participants choose to denounce their peers when reports are not incentivized. In this consequential group, rewards backfire: only 10% of employees report when denunciations are incentivized. In the non-consequential group, where participants are guaranteed that their reports will not be forwarded to the government, only 6% of employees denounce absence without rewards. However, when moral concerns of harming others are limited through the guarantee of non-consequentiality, rewards do not backfire: the incentivized reporting rate is 12%.