Myths and Numbers on Whistleblower Rewards (W.P, Version)

 G. Spagnolo, T. Nyrerod, forth coming in Regulation and Governance

Abstract: Whistleblower rewards have been used extensively in the United States to limit procurement fraud and tax evasion, and since the financial crisis their use has been extended to fight financial fraud. There is currently debate over their introduction in Europe, but authorities there appear considerably less enthusiastic than their American counterparts. While it is important that these tools are scrutinized in a lively democratic debate, much has been written – even by important institutional players – that has no empirical backing or openly contrasts the available evidence from independent research. In this paper we review some of the most debated issues regarding the potential benefits and costs of financial incentives for whistleblowers, while trying to separate existing evidence from conjectures with no empirical support, and myths in contrast to available evidence.

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