Motivating Whistleblowers (W.P, Version)

G. Spagnolo, J. Butler and D. Serra, accepted for publication in Management Science

Abstract: We experimentally investigate employees’ decisions to blow the whistle on a manager whose law-breaking benefits the firm but harms society. We investigate the effects of both financial rewards and non-monetary incentives, in the form of public scrutiny, on whistleblowing as well as their interaction with the visibility of harm, i.e., whether the harm to society stemming from the manager’s malfeasance is known to the general public. Our results suggest that: i) financial rewards substantially increase the likelihood of whistleblowing; ii) public scrutiny and social judgment increase (decrease) whistleblowing when the negative externalities generated by fraud are visible (invisible) to the public. Ancillary results suggest an intriguing relationship between political orientation and responsiveness to public scrutiny.

Paper link