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Motivating Whistleblowers

Author

Listed:
  • Jeffrey V. Butler

    (University of California Merced, Department of Economics)

  • Danila Serra

    (Southern Methodist University, Department of Economics)

  • Giancarlo Spagnolo

    (SITE-Stockholm School of Economics, EIEF, Tor Vergata & CEPR)

Abstract

Law-breaking activities within an organization bene?ting the ?rm at the expense of the general public are widespread but di¢ cult to uncover, making whistleblowing by employees desirable. We employ a novel laboratory experiment to investigate if and how monetary incentives and expectations of social approval or disapproval, and their interactions, a¤ect the decision to blow the whistle. Experimental results show that: i) ?nancial rewards signi?cantly increase the likelihood of whistleblowing and do not substantially crowd out non-monetary motivations activated by expectations of social judgment; and ii) the possibility of social judgment decreases (increases) whistleblowing when the public is unaware (aware) of the negative externalities generated by fraud, suggesting that whistleblowers are at least partly motivated by a desire for social approval. Our ?ndings suggest that whistleblowers on corporate fraud should be ?nancially rewarded and should be shielded from public/media scrutiny when the social cost of the illegal activity is not visible or salient to the public. We also ?nd evidence of an interesting relationship between political orientation and social judgment: while left-leaning subjects react to the possibility of receiving social approval or disapproval as expected, right-leaning people are una¤ected by it.

Suggested Citation

  • Jeffrey V. Butler & Danila Serra & Giancarlo Spagnolo, 2017. "Motivating Whistleblowers," CEIS Research Paper 419, Tor Vergata University, CEIS, revised 12 Dec 2017.
  • Handle: RePEc:rtv:ceisrp:419
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    Cited by:

    1. Masclet, David & Montmarquette, Claude & Viennot-Briot, Nathalie, 2019. "Can whistleblower programs reduce tax evasion? Experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 83(C).
    2. 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.
    3. Attar, Andrea & Campioni, Eloisa & Piaser, Gwenaël, 2019. "Private communication in competing mechanism games," Journal of Economic Theory, Elsevier, vol. 183(C), pages 258-283.
    4. Theo Nyreröd & Giancarlo Spagnolo, 2021. "Myths and numbers on whistleblower rewards," Regulation & Governance, John Wiley & Sons, vol. 15(1), pages 82-97, January.
    5. Buckenmaier, Johannes & Dimant, Eugen & Mittone, Luigi, 2020. "Effects of institutional history and leniency on collusive corruption and tax evasion," Journal of Economic Behavior & Organization, Elsevier, vol. 175(C), pages 296-313.
    6. Armenak Antinyan & Luca Corazzini & Filippo Pavesi, 2018. "What Matters for Whistleblowing on Tax Evaders? Survey and Experimental Evidence," Working Papers 07/2018, University of Verona, Department of Economics.
    7. Paolo Buccirossi & Giovanni Immordino & Giancarlo Spagnolo, 2021. "Whistleblower rewards, false reports, and corporate fraud," European Journal of Law and Economics, Springer, vol. 51(3), pages 411-431, June.
    8. Nyreröd, Theo & Spagnolo, Giancarlo, 2017. "Myths and Numbers on Whistleblower Rewards," SITE Working Paper Series 44, Stockholm School of Economics, Stockholm Institute of Transition Economics, revised 27 Apr 2018.
    9. Tommaso Proietti & Niels Haldrup & Oskar Knapik, 2017. "Spikes and memory in (Nord Pool) electricity price spot prices," CEIS Research Paper 422, Tor Vergata University, CEIS, revised 18 Dec 2017.
    10. Spagnolo, Giancarlo & Nyreröd, Theo, 2019. "Financial Incentives for Whistleblowers: A Short Survey," SITE Working Paper Series 50, Stockholm School of Economics, Stockholm Institute of Transition Economics.
    11. Maria Vittoria Levati & Chiara Nardi, 2019. "The power of words in a petty corruption experiment," Working Papers 18/2019, University of Verona, Department of Economics.
    12. Antinyan, Armenak & Corazzini, Luca & Pavesi, Filippo, 2020. "Does trust in the government matter for whistleblowing on tax evaders? Survey and experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 77-95.
    13. Jun Hu, 2021. "Asymmetric punishment, Leniency and Harassment Bribes in China: a selective survey," Working Papers hal-03119491, HAL.
    14. Ni Made Mega Abdi Utami & Gugus Irianto & Yeney Widya Prihatiningtias, 2020. "Analyzing the effect of financial reward, personal cost and reporting channel on whistleblowing intentions utilizing an experimental study," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(2), pages 125-132, March.

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    More about this item

    Keywords

    Whistleblowing; fraud; rewards; social judgment; experiment.;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation

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