On the economics of whistle-blowing behavior: the role of incentives

Mauricio Villena and Marcelo Villena

MPRA Paper from University Library of Munich, Germany

Abstract: The role of whistle-blowing as a mechanism for deterring corruption has been conspicuously neglected in the economic literature. This is quite surprising given the increase in legislation aimed at preventing corruption that includes whistle-blowing clauses and the extensive literature on whistle-blowing outside economics. In fact, we know of no formal economic model that deals squarely with the analysis of the role and potential impact of whistleblowing on the persistence of corruption in organizations. Therefore, in an attempt to at least partially fill this gap, we present a theoretical model for approaching the issue, focusing specifically on the role of economic incentives to encourage whistle-blowing behaviour. We model corruption as a social norm of behaviour using elements of evolutionary game theory (EGT). We use the concept of replicator dynamics to explore the local asymptotical stability of several types of behaviour within organizations: (i) honest, corrupt, and honest whistle-blowing and (ii) honest, corrupt whistle-blowing, and honest whistle-blowing.

Keywords: Corruption; whistle-blowing; social norms; evolutionary games (search for similar items in EconPapers)
JEL-codes: C73 D73 K42 (search for similar items in EconPapers)
Date: 2010-03-24, Revised 2010-03-24
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://mpra.ub.uni-muenchen.de/36310/1/MPRA_paper_36310.pdf revised version (application/pdf)

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