A theory of whistleblower rewards

Yehonatan Givati*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

24 Scopus citations

Abstract

To enforce the law, the government must learn about violations of the law. One way of obtaining such information is by employing police officers and investigators. An alternative way is by rewarding whistleblowers. In this paper I consider two basic questions relating to whistleblower rewards. First, what is the optimal size of whistleblower rewards? Second, how should we choose between employing police officers and rewarding whistleblowers? I develop a model that highlights two features of thewhistleblowing context: whistleblowers bear a personal cost, and a reward may encourage false reports. I find that there is a nonmonotonic relationship between the personal cost to whistleblowers and the optimal reward, and between the risk of a false report and the optimal reward. Furthermore, offering a whistleblower reward dominates the employment of police officers and investigators when the risk of a false report is small.

Original languageAmerican English
Pages (from-to)43-72
Number of pages30
JournalJournal of Legal Studies
Volume45
Issue number1
DOIs
StatePublished - Jan 2016

Bibliographical note

Publisher Copyright:
© 2016 by The University of Chicago. All rights reserved.

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