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Motivating Whistleblowers

Jeffrey Butler (), Danila Serra () and Giancarlo Spagnolo

No 419, CEIS Research Paper from Tor Vergata University, CEIS

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.

Keywords: Whistleblowing; fraud; rewards; social judgment; experiment. (search for similar items in EconPapers)
JEL-codes: K42 C92 D04 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-hrm and nep-law
Date: 2017-12-12, Revised 2017-12-12
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Working Paper: Motivating Whistleblowers (2017) Downloads
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