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The Hidden Costs of Whistleblower Protection

Year: 2025

Type: article

Abstract: We conduct a laboratory experiment to analyze the influence of whistleblower protection on the cooperative behavior between a manager and an employee. Before taking part in a trust game with her employee, a manager has the opportunity to embezzle money at the expense of a third party. The employee observes her decision and may trigger an investigation by blowing the whistle. The treatments vary with respect to immunity and anonymity for the whistleblower. We compare misbehavior, reporting, and cooperative behavior across the treatments. The results suggest that whistleblower protection could deter wrongdoing, but could also have a detrimental effect on cooperation in organizations if it increases the probability for whistleblowing.

Source: Review of Law & Economics

DOI: 10.1515/rle-2024-0075

Authors: Niklas Wallmeier, Timo Promann

Institution: Universität Hamburg

Language: English

Topic: Ethics in Business and Education

Subfield: Information Systems and Management

Field: Decision Sciences

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $2,712