Villena, Mauricio G. and Villena, Marcelo J. (2010): On the economics of whistle-blowing behavior: the role of incentives.
This is the latest version of this item.
Download (2614Kb) | Preview
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.
|Item Type:||MPRA Paper|
|Original Title:||On the economics of whistle-blowing behavior: the role of incentives|
|English Title:||ON THE ECONOMICS OF WHISTLE-BLOWING BEHAVIOUR: THE ROLE OF INCENTIVES|
|Keywords:||Corruption, whistle-blowing, social norms, evolutionary games|
|Subjects:||D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy; Administrative Processes in Public Organizations; Corruption
K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
|Depositing User:||Mauricio Villena|
|Date Deposited:||30. Jan 2012 23:47|
|Last Modified:||19. Feb 2013 04:03|
Abed, G. T. and Gupta, S., eds., (2002) Governance, Corruption and Economic Performance, Washington D.C.: International Monetary Fund.
Acemoglu, D. (1995) Reward Structures and the Allocation of Talent, European Economic Review, vol. 39, pp. 17–33.
Aidt, T. (2003) Economic Analysis of Corruption: A Survey, Economic Journal, vol. 113: F632- F652.
Alford, C. F., (2001) Whistleblowers: Broken Lives and Organizational Power, New York: Cornell University. Press.
Andvig, J. C. and Moene, K.O. (1990) How Corruption may Corrupt, Journal of Economic Behaviour and Organization, vol. 13(1), pp. 63–76.
Bardhan, P. (1997) Corruption and Development: A Review of Issues, Journal of Economic Literature, vol. 35, pp. 1320–346.
Becker, G. and Stigler, G. (1974) Law Enforcement, Malfeasance and the Compensation of Enforcers, Journal of Legal Studies, vol. 3, pp. 1–19.
Bowles, S. (2004) Microeconomics: Behaviour, Institutions and Evolution, New Jersey: Princeton University Press
Cadot O. (1987) Corruption as a Gamble, Journal of Public Economics, vol. 33, pp. 223–44.
Clark, C. (1997) Whistleblowers, CQ Researcher 7: 1057-80.
Davis, M. (1999) Professional Responsibility: Just Following the Rules? Business and Professional Ethics Journal, vol. 18, pp. 65-87.
Elliston, Frederick E. (1985). Whistleblowing Research: Methodological and Moral Issues, Praeger: New York.
Gintis, H. (2000) Game Theory Evolving: A Problem-Centered Introduction to Modeling Strategic Interaction, Princeton, New Jersey, University of Princeton Press.
Glazer, M. P. and P. Glazer (1989) The Whistleblowers, Basic Books: New York.
Groeneweg, S. (2001) Three Whistleblower Protection Models: A Comparative Analysis of Legislation in Australia, the United States and the United Kingdom, Research Directorate, Public Service Commission of Canada: Ottawa.
Heyes, A. and Kapur, S. (2008) An Economic Model of Whistle-Blower Policy, Journal of Law, Economics, and Organization, forthcoming.
Hunt, G. (1997) Whistleblowing, in The Encyclopedia of Applied Ethics, Academic Press: New York.
Jain A. K. (2001) Corruption: A Review, Journal of Economic Surveys, vol. 15(1), pp. 71–121.
Jos, P. and Tompkins, M. (1989) In Praise of Difficult People: A Portrait of the Committed Whistleblower, Public Administration Review vol. 49: 552-61.
Jubb, P. (1999) Whistleblowing: A Restrictive Definition and Interpretation, Journal of Business Ethics, vol. 21: 77-94.
Lui, F. T. (1986) A Dynamic Model of Corruption Deterrence, Journal of Public Economics, vol. 31, pp. 215–36.
Miceli, M. and Near, J. (1992) Blowing the Whistle: The Organizational and Legal Implications for Companies and Employees, Lexington Books: New York.
Miethe, T. (1999) Whistleblowing at Work: Tough Choices in Exposing Fraud, Waste and Abuse on the Job, Westview Press: Boulder, Colorado.
Mookherjee, B. and Png, I. P. L. (1995) Corruptible Law Enforcers: How Should They be Compensated? Economic Journal, vol. 105, pp. 145–59.
Murphy, K. M., Shleifer, A. and Vishny, R. W. (1991) The Allocation of Talent: Implications for Growth, Quarterly Journal of Economics, vol. 106, pp. 503–30. Reprinted in Shleifer and Vishny (1998) chapter3.
Murphy, K. M., Shleifer, A. and Vishny, R. W. (1993) Why is Rent Seeking so Costly to Growth? American Economic Review Paper and Proceedings, vol. 83, pp. 409–4.
Reprinted in Shleifer and Vishny (1998) chapter 4. Rijckeghem, C. van and Weder, B. S. (2001) Corruption and the Rate of Temptation: Do Low Wages in the Civil Service Cause Corruption? Journal of Development Economics, vol. 65, pp. 291–307. Reprinted in Abed and Gupta (2002) chapter 3.
Sah, R. K. (1988) Persistence and Pervasiveness of Corruption: New Perspectives, Yale Economic Growth Center Discussion Paper 560.
Samuelson, L. (1997) Evolutionary Games and Equilibrium Selection, Cambridge MA: MIT Press.
Shleifer, A. and Vishny, R. W. (1998) The Grabbing Hand, Government Pathologies and Their Cures, Cambridge, MA: Harvard University Press.
Søreide, T. (2008) Beaten by Bribery: Why not Blow the Whistle?, Journal of Institutional and Theoretical Economics / Zeitschrift für die Gesamte Staatswissenschaft vol. 164 (3): 407-428.
Stephan, A. (2008) Beyond the Cartel Law Handbook: How Corruption, Social Norms and Collectivist Business Cultures Can Undermine Conventional Enforcement Tools. ESRC Centre for Competition Policy Working Paper No. 08-29. Available at SSRN:http://ssrn.com/abstract=1277205.
Taylor, P. and Jonker, L. (1978) Evolutionary Stable Strategies and Game Dynamics, Mathematical Biosciences, Vol. 40, pp.145-156.
Tirole, J. (1996) A Theory of Collective Reputations (with applications to the Persistence of Corruption and to Firm Quality), The Review of Economic Studies, vol. 63, pp. 1–22.
Van Damme, E. (1994) Evolutionary Game Theory, European Economic Review, vol. 38: 847-858.
Vega-Redondo, F. (1996) Evolution, Games and Economic Behaviour, Oxford: Oxford University Press.
Villena, MG and Villena, MJ (2004) Evolutionary Game Theory and Thorstein Veblen’s Evolutionary Economics: Is EGT Veblenian? Journal of Economic Issues, 38(3): 585- 610.
Weibull, J. (1996) Evolutionary Game Theory, London, England: The MIT Press.
Available Versions of this Item
On the economics of whistle-blowing behavior: the role of incentives. (deposited 14. Jan 2012 03:51)
- On the economics of whistle-blowing behavior: the role of incentives. (deposited 30. Jan 2012 23:47) [Currently Displayed]