Schmolke, Klaus Ul ich; U ikal, Ve ena
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Whis leblowing: incen i es and si ua ional de e minan s
Jou nal o Business Economics
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Sugges ed Ci a ion: Schmolke, Klaus Ul ich; U ikal, Ve ena (2025) : Whis leblowing: incen i es
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ORIGINAL PAPER
Whis leblowing: incen i es andsi ua ional de e minan s
KlausUl ichSchmolke1 · Ve enaU ikal2
Accep ed: 2 Feb ua y 2025 / Published online: 26 Feb ua y 2025
© The Au ho (s) 2025
Abs ac
Law make s inc easingly y o capi alize on indi iduals ha ing acqui ed knowledge
o co po a e c imes o o he misconduc by inducing hem o blow he whis le. In a
labo a o y expe imen we measu e he e ec i eness o incen i es on he willingness
o epo such misconduc o a sanc ioning au ho i y. We ind ha ines o non-
epo ing inside s, ewa ds, and e en simple commands, inc ease he p obabili y o
whis leblowing. We ind he s onges e ec o ines. Si ua ional de e minan s also
in luence he willingness o blow he whis le: Inside s who a e nega i ely a ec ed
by he misconduc a e mo e likely o blow he whis le han non-a ec ed o p o i ing
inside s. Those (nega i ely a ec ed) ic ims a e also sensi i e o he misconduc ’s
impac on he au ho i y sanc ioning he misconduc (public au ho i y o employe ):
Whis leblowing is mo e likely i he en o cemen au ho i y is nega i ely a ec ed
compa ed o posi i ely o no a ec ed.
Keywo ds Whis leblowing· Incen i es· Si ua ional de e minan s· Expe imen
JEL Classi ica ion C91· D82· K42· M59
1 In oduc ion
E e y once in a while a big scandal shakes he con idence in he in eg i y o
co po a e conduc and leads o public ou c y. The ou ine esponse o he poli ical
cas e is o come o wa d wi h new egula ion ha imposes e e s ic e ules o
conduc which come wi h e e ha she sanc ions in case o in ingemen . Howe e ,
i is a uism ha coming up wi h new p ohibi ions and aising sanc ions a e
* Klaus Ul ich Schmolke
schmolk[email p o ec ed]
Ve ena U ikal
[email p o ec ed]
1 Facul y o Law, Managemen andEconomics, Johannes Gu enbe g Uni e si y Mainz,
Jakob-Welde -Weg 9, 55128Mainz, Ge many
2 P i a e Uni e si y Schloss Seebu g, Seebu gs aße 8, 5201Seeki chenAmWalle see, Aus ia
726
K.U.Schmolke, V.U ikal
ela i ely ine ec i e egula o y s a egies as long as he ac ual en o cemen o
he new ules does no keep pace wi h hese measu es. E ec i e en o cemen by
supe iso y au ho i ies and public p osecu ion, hough, is o en hampe ed by he
lack o su icien esou ces o ga he he in o ma ion necessa y o e eal co po a e
misconduc . Facing his p edicamen , law make s inc easingly y o capi alize
on indi iduals ha ing acqui ed knowledge o such misconduc by inducing hem
o blow he whis le.1 This app oach is based on he con ic ion ha —had such
indi iduals, ypically employees o he delinquen en i y, in o med public au ho i ies
a an ea ly s age— he damage done by co po a e scandals like Wo ldcom, Pa mala
(bo h accoun ing aud), Siemens (la ge scale b ibe y), Toshiba (accoun ing aud),
Volkswagen ( aud on diesel emissions) o —mo e ecen ly—Wi eca d (accoun ing
aud) could ha e been hugely educed i no p e en ed. The cases o Siemens and
Volkswagen also e y clea ly show ha co po a e en i ies hemsel es ha e s ong
incen i es o in eg a e whis leblowe schemes in o hei in e nal compliance
sys ems.
Howe e , po en ial whis leblowe s o en hesi a e o come o he o e and epo
o he compliance o ice o hei co po a ion (in e nal whis leblowing) o o a public
au ho i y (ex e nal whis leblowing). This is due o he ac ha whis leblowing
has some p ope ies o a public good: Whe eas he whis leblowe o en gains li le
mo e han he sa is ac ion om “doing he igh hing”, she en isages po en ially
s agge ing cos s. Beyond di ec e alia o y sanc ions imposed by he employe 2
ha may culmina e in job loss, whis leblowe s pu po edly ace blacklis ing om
o he po en ial employe s in he indus y, os acism om colleagues in addi ion o
he psychological and physical cos s caused by s ess, public exposu e and he like.3
In sho , he whis leblowe is highly unde compensa ed o he socially bene icial
e o s. This public good p oblem may be agg a a ed by deeply oo ed social
a i udes pe cei ing whis leblowing as some kind o dele e ious denuncia ion.4
Agains his backg ound, he legisla u es a ound he wo ld come up wi h new
egula o y ini ia i es in o de o il he cos –bene i calculus o he po en ial
in o man in a o o blowing he whis le. Fu he mo e, hese ini ia i es may
1 Heyes and Kapu (2008); o a global o e iew see Lewis (2010); o an example om Eu opean Capi-
al Ma ke s Law c . Fleische and Schmolke (2012); as o he EU Whis leblowe Di ec i e c . Schmolke
(2022).
2 Spedding (2004) lis s c i icism, poo pe o mance e alua ions, puni i e ans e s and job loss as exam-
ples.
3 Al o d (2001); Rapp (2007): “Po en ial whis leblowe s ace emendous obs acles beyond di ec
employe e alia ion. […] Mo eo e , whis leblowe s may ea blacklis ing om u u e employe s who
suspec disloyal y, as well as social os acism om hei co-wo ke s. Addi ionally, he psychological bu -
dens associa ed wi h whis leblowing, including he e ec s o public c i icism and a leng hy s ay in li iga-
ion’s limeligh , canno be igno ed.”
4 As o such a i udes cul i a ed in Cen al Eu ope, which can be explained his o ically see he li e a u e
and he quo es ci ed by Dowling J . (2008).
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Whis leblowing: incen i es andsi ua ional de e minan s
ul ima ely change social a i udes owa ds whis leblowe s.5 A i s , legisla ion
ocused on he p o ec ion o employees in he public se ice.6 La e on, law-
make s included employees o p i a e en i ies in o hei whis leblowe p o ec ion
egimes. No ably, he Uni ed S a es enac ed he Sa banes–Oxley Ac 2002 (SOX)
in esponse o some majo accoun ing scandals, including he abo emen ioned cases
o Wo ldcom and En on. This ac con ains p o ec i e measu es o whis leblowe s
o p i a e co po a ions being lis ed a a US s ock exchange (Sec. 806 SOX).7 The
Dodd-F ank Wall S ee Re o m and Consume P o ec ion Ac 2010 (Dodd-F ank
Ac ), being a eac ion o he inancial c isis 2008, u he expands he whis leblowe
p o ec ion in oduced by SOX. In Oc obe 2019 he EU ollowed along hese lines
and adop ed a di ec i e con aining a comp ehensi e egula o y amewo k o he
p o ec ion o whis leblowe s epo ing on b eaches o EU law.8
Whis leblowe p o ec ion, howe e , was only a side issue o he Dodd-F ank
whis leblowe legisla ion. I s main ea u e was he in oduc ion o a whis leblowe
ewa d p og am wi h ega d o he iola ion o US secu i ies laws (Sec. 922
Dodd-F ank Ac ).9 Whis leblowe s he eby became en i led o 10 o 30 pe cen o
mone a y sanc ions exceeding US$ 1,000,000 ha a e imposed by he Secu i ies
Exchange Commission (SEC)10 in consequence o he whis leblowe ’s in o ma ion.
A simila awa d scheme has been in oduced by he Mo o Vehicle Sa e y
Whis leblowe Ac 2015 which aims a igh ing in ac ions in he au o indus y.
And e y ecen ly, in Augus 2024, he US Depa men o Jus ice launched a new
Co po a e Whis leblowe Awa ds Pilo P og am modelled in pa a e he SEC
p og am.11
Such boun y p og ams ha e a long adi ion in US law da ing back o 1863 when
he False Claims Ac came in o o ce. In Eu ope on he o he hand, he idea o incen-
i izing po en ial in o man s by mone a y ewa ds is a a he new app oach o bol-
s e up law en o cemen . The Dodd-F ank Ac inspi ed EU legisla u e which adop ed
5 C . wi h ega d o he UK Public In e es Disclosu e Ac 1998 (PIDA) he p edic ion o Gobe and
Punch (2000).
6 In he a e ma h o he Wa e ga e Scandal he Uni ed S a es enac ed he Ci il Se ice Re o m Ac
1978, which p o ided he i s p o ec i e ules o whis leblowe s in he ede al public se ice. The Fed-
e al Whis leblowe Ac 1989 aimed a s eng hening he p o ec ion o ede al whis leblowe s agains
employe e alia ion u he . Fo u he de ails on he Whis leblowe P o ec ion Ac 1989, see Ebe sole
(2011). O he coun ies ollowed his example. Fo an example, ake he Sou h Aus alia Whis leblowe s
P o ec ion Ac 1993.
7 Fu he mo e, such co po a ions we e obliged o ins all audi commi ees being esponsible o he
o e sigh o he wo k o accoun ing i ms employed by he co po a ion, which in u n had o “es ablish
p ocedu es o (…) he con iden ial, anonymous submission by employees o conce ns ega ding ques-
ionable accoun ing o audi ing ma e s” (Sec 301 SOX). Fo u he de ails on Sec 301 SOX, see Dwo -
kin (2007).
8 Di ec i e (EU) 2019/1937, OJ (2019) L 305/17.
9 P io o he Dodd-F ank Ac he Inside T ading and Secu i ies En o cemen Ac 1988 al eady es ab-
lished a – much mo e limi ed—whis leblowe boun y p og am o in o ming on inside ading. Fo u -
he de ails, see Ebe sole (2011).
10 The Secu i ies Exchange Commission (SEC) is he Fede al US au ho i y egula ion capi al ma ke s
and en o cing secu i ies law.
11 Fo u he in o ma ion, c . h ps:// www. jus i ce. go / c imi nal/ c imi nal- di is ion- co po a e- whis leblo
we - awa ds- pilo - p og am.
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K.U.Schmolke, V.U ikal
whis leblowe ules in he new Ma ke Abuse Regula ion 2014 (MAR) which came
in o o ce in mid-2016.12 These ules include he au ho iza ion o he EU Membe
S a es o “p o ide o inancial incen i es o pe sons who o e ele an in o ma ion
abou po en ial in ingemen s o his Regula ion” (A . 32(4) MAR). Fu he mo e,
wi h ega d o an i us law en o cemen whis leblowe boun y schemes make in oads
in o Eu ope as well, bu om a di e en di ec ion.13 The use o such ewa d schemes
in an i us law en o cemen o igina es om Sou h Ko ea. The US Cong ess, how-
e e , e ained om e eals ha he di e en US.14 All in all, i is sa e o say ha ,
apa om p o ec i e ules, wi h ega d o whis leblowe legisla ion inancial ewa d
p og ams a e cu en ly in he cen e o e o m and policy deba es.
While legisla u es wo k on se ing he s age o whis leblowe s o become e ec-
i e assis an s in en o cing he law, co po a ions hemsel es s i e o implemen
e icacious in e nal whis leblowe ou ines as pa o hei compliance sys ems.
The eby, co po a ions ge ea ly access o in o ma ion abou in e nal misconduc as
well as he oppo uni y o con ol he way such in o ma ion is disclosed o he com-
pe en supe iso y au ho i ies (and he public a la ge).
All hese ini ia i es and ac i i ies ci cle a ound he one c ucial ques ion: How
o make po en ial in o man s, no ably employees, blow he whis le? Feldman and
Lobel (2010) ca ego ized he cu en egula o y s a egies on he able as “P o ec —
Command—Fine—Pay”. The “P o ec ” s a egy e e s o an i- e alia ion p o ec ions,
while he “Pay” s a egy designa es monen a y incen i es. In he “Fine” s a egy
a mone a y sanc ion is imposed o no epo ing he misconduc in ques ion. The
“Command” s a egy con ines i sel o obliging po en ial in o man s o epo he
misconduc .
A i s glance, one migh be inclined o disca d he la e wo s a egies wi hou
u he ado, since he “Fine” s a egy is seemingly only a “Pay” s a egy in disguise,
and he “Command” s a egy appa en ly lacks any inancial incen i e o change
beha io . Taking a close look, howe e , e eals ha he di e en aming15 o he
“Fine” s a egy may be he pi o al ea u e ha makes i s impac on po en ial in o m-
an s di e om he “Pay” s a egy. While he di e en aming should ha e no e ec
on a ional ac o s, po en ial in o man s being loss a e se should ce e is pa ibus be
mo e inclined o yield o he h ea o being ined han o he expec a ion o ecei -
ing a ewa d (c . De Gees and Da i-Ma iacci 2013).
12 Regula ion (EU) No 596/2014, OJ (2014) L 173/1. In Mid-2016 he On a io Secu i ies Commission
in oduced a simila ewa d scheme o blowing he whis le on secu i ies aud, while he Quebec Secu i-
ies Commission e ained om doing so because i pe cei ed ha he e is “no enough e idence o show
ha money gene a ed mo e o be e ips”.; c . The Economis , Payou s o whis leblowe s—Whis le
while you wo k, July 16 h 2016, p. 60.
13 C . UK Compe i ion & Ma ke s Au ho i y (CMA) In o man Rewa d Policy (2014), and Hunga ian
Compe i ion Au ho i y (GVH), Regula ques ions abou he ca el in o man ewa d (2010); o u he
de ail, see Polański (2014).
14 C . Sulli an e al. (2011): The Ko ea Fai T ade Commission (KFTC) in oduced i s Ca el In o man
Rewa d P og am in 2002. The adop ion o simila measu es was discussed in he US in 2011. Bu no
such laws ha e been enac ed so a .
15 The e m aming does no apply in i s echnical sense inso a , as he end-s a e/size o payo o “Fine”
ob iously di e s om “Pay”. The decision p oblem is, howe e , iden ical: To abs ain om whis leblow-
ing comes wi h eal cos s (“Fine”) o oppo uni y cos s (“Pay”), espec i ely.
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Whis leblowing: incen i es andsi ua ional de e minan s
On he o he hand, he e a e signi ican d awbacks o he “Fine” s a egy. I
capi alizing on whis leblowe s is a eac ion o he lack o su icien esou ces o he
public au ho i ies (o he co po a e compliance depa men ) o ga he he in o ma ion
necessa y o e eal misconduc , he imposi ion o a ine may be (pe cei ed as) an
emp y h ea . Tha is, while he “Pay” s a egy wo ks as a sc eening de ice o e eal
p i a e ac o s possessing ele an in o ma ion, he “Fine” s a egy may no wo k his
way.
As o he “Command” s a egy elaxing he s ic assump ions o he s anda d
model migh again do he ick. The e is a s and o li e a u e sugges ing ha legal
no ms as such can shape he p e e ences o p i a e ac o s (“p e e ence-shaping
e ec s o law”), he eby in luencing beha io wi hou p o iding u he incen i es
ia law en o cemen (Suns ein 1986). Fu he mo e and apa om his e ec , an
“exp essi e unc ion” is a ibu ed o law, by which legal no ms appeal o social
no ms. These social no ms, in u n, in luence beha io by means o epu a ional
mechanisms and in o mal sanc ions. Again, no di ec legal consequences a e
needed o p oduce his e ec (Suns ein 1996). Hence by elying on hese e ec s
o law and, hus, dispensing wi h he whole appa a us o law en o cemen , he
beha io o he add essees o he legal no m (he e: po en ial in o man s) migh be
in luenced in he in ended way a signi ican ly lowe cos s.16 Finally, wi h ega d o
in e nal whis leblowing simila e ec s may be achie ed by co po a ions/employe s
ia implemen ing a code o conduc o con ac ual du ies ha oblige po en ial
in o man s o epo .
The e is some empi ical analysis om obse a ional da a on he e ec s o
incen i izing whis leblowe s (see li e a u e sec ion). Un o una ely, obse a ional
da a o en su e s om he in o ma ional and he coun e ac ual p oblem which
makes i impossible o exac ly measu e he e ec s o he whis leblowe ewa d
p og am and compa e hem o al e na i e incen i e designs.17 By conduc ing a
labo a o y expe imen , ou s udy ci cum en s his p oblem. A ypical co po a e
misconduc in ol es an inc ease o he w ongdoe ’s p o i a he expense o o he s
(e.g. employees, sha eholde s, o he public). Misconduc he e o e imposes
inequali y. In ou design we cap u e his aspec o an i-social beha io . I also
e lec s all elemen s in he de ini ion o whis leblowing by Jubb (1999). A playe
decides whe he o inc ease his p o i h ough misconduc . O he s a e a ec ed by
and lea n abou he misconduc and can in o m he au ho i y. The au ho i y has he
op ion—in case she lea ns abou he misconduc — o punish he w ongdoe . Ou
ocus is o measu e he willingness o blow he whis le ac oss di e en scena ios.
In he i s o ou wo expe imen s (1 and 2), we ocus on incen i es o induce
whis leblowing. We compa e he willingness o blow he whis le in he h ee o
he ou s a egies desc ibed abo e; ha is Rewa d, Fine and Command. We also
compa e he impac o di e en sizes o ewa ds and ines on he willingness o blow
he whis le. Fu he mo e, ou expe imen aims a shedding ligh on whe he and,
i so, how he willingness o epo depends on he way po en ial in o man s a e
16 Funk (2007): “Fi s o all, beha io migh be changed a lowe cos s han sugges ed by he classical
‘Law & Economics’ li e a u e. Me ely by passing a law (e en i unen o ced), ci izens migh adhe e o i .”
17 As o hese p oblems in gene al, c . Apes eguia e al. (2007).
730
K.U.Schmolke, V.U ikal
a ec ed by he misconduc o be epo ed. This may e eal he desi abili y, i no
necessi y, o egula o s and employe s implemen ing whis leblowe p og ams o
di e en ia e among po en ial whis leblowe s acco ding o he way hey a e a ec ed
by he misconduc in ques ion.18
In expe imen 2 we s udy whe he and o wha ex en he willingness o blow
he whis le depends on whe he and how he au ho i y sanc ioning he misconduc
(public au ho i y o employe /en e p ise) is a ec ed by he epo ed misconduc .
Concededly, i he willingness o blow he whis le depends on he expec ed
sanc ion imposed by he au ho i y, his may be a ’non-issue’ when i comes o
ex e nal whis leblowing o public au ho i ies. Such au ho i ies and he agen s ac ing
on hei behal a e ypically una ec ed by he misconduc hey a e asked wi h
punishing. Howe e , he esul s o expe imen 2 may shed ligh on he compa a i e
e ec i eness o in e nal whis leblowing. To illus a e his poin , i su ices o ecall
he examples on co po a e scandals men ioned a he beginning o his pape . The e
we see a leas in some o he cases ha he misconduc in ques ion ca ied some
u ili y o he co po a ion in he sho un (while being dele e ious in he long un).
Ou main indings a e: Financial incen i es and e en simple commands
inc ease he p obabili y o whis leblowing. Si ua ional de e minan s also in luence
he willingness o blow he whis le: Inside s who a e nega i ely a ec ed by he
misconduc a e mo e likely o blow he whis le han non-a ec ed o p o i ing
inside s. Those (nega i ely a ec ed) ic ims a e also sensi i e o he misconduc ’s
impac on he sanc ioning au ho i y: Whis leblowing is mo e likely i he au ho i y
is nega i ely a ec ed compa ed o posi i ely o no a ec ed.
2 Rela ed li e a u e
The e is a huge and cons an ly g owing body o li e a u e on whis leblowing. This is
ue o economics, bu also o psychology and e en mo e so o law.19 Fi s o all,
he e is some empi ical analysis om obse a ional da a on he e ec s o incen i -
izing whis leblowe s. Mos no ably, he SECO ice o he Whis leblowe publishes
annual epo s on he de elopmen s o he Dodd-F ank Whis leblowe P og am. The
la es epo published a he end o 2023 shows ha he numbe o ips ecei ed by
he SEC g ew signi ican ly o e he yea s ( om 3,001 (2012) o 18,354 (2023)).
Dwo kin and Baucus (2007) and Dyck e al. (2010) analyzed ac ual law sui s whe e
whis leblowing was in ol ed. Dwo kin and Baucus (2007) examined 33 cases o
employees whose employmen was w ong ully e mina ed o whis leblowing. They
compa ed he cha ac e is ics o in e nal and ex e nal whis leblowe s and he conse-
quences ha ensue a e hei epo ing. Dyck e al. (2010) s udied 216 la ge scale
co po a e aud cases. Wi h ega d o ou expe imen , hei main inding is ha he
po ion o employee whis leblowe s ose signi ican ly whe e US law p o ides high
mone a y ewa ds unde he False Claims Ac .
18 The way people a e a ec ed by a ce ain misconduc may, o example, ha e a signi ican impac on
hei in e nal mo i a ion o blow he whis le, c . Feldman and Lobel (2010).
19 C . he su ey o Dasgup a and Kesha wani (2010), Lee and Chao (2018), and Nicholls e al. (2021)
as well as he e e ences gi en in he compa a i e s udy o Thüsing and Fo s (2016).
731
Whis leblowing: incen i es andsi ua ional de e minan s
Un o una ely, obse a ional da a o en su e s om he in o ma ional and he
coun e ac ual p oblem which makes i impossible o exac ly measu e he e ec s
o he whis leblowe ewa d p og am and compa e hem o al e na i e incen i e
designs. Ne e heless, i is a he di icul o nea ly impossible o ca y ou
in es iga ions in o une hical conduc in he wo kplace by obse a ion.20 The e o e,
many esea ch s udies o whis leblowing use sel - epo ed willingness o blow he
whis le as explana o y a iable (Vic o e al. 1993). Howe e , since he co ela ion
be ween whis leblowing in en and ac ual whis leblowing seems o be a he low
(c . Mesme -Magnus and Viswes a an 2005), i is wo hwhile o ocus on e ealed
a he han s a ed willingness by means o a mo e objec i e expe imen al design.
Despi e ha , up o now he numbe o expe imen al s udies on whis leblowing
is compa a i ely limi ed.21 The e a e di e en s ands o s udies, each dealing wi h
whis leblowing in a ce ain legal con ex . B eue (2013) dis inguishes be ween
“ ai o ous whis leblowing” and “wa chdog whis leblowing”. While he i s ype
desc ibes epo ing misbeha io by ca el membe s, b ibe s o co up o icials
who b eak up conspi acies om he inside, he second one e e s o whis leblowing
by a hi d pe son who is no esponsible o he illegal conduc , e.g. an obse ing
bys ande . Since ou pape con ibu es o he “wa chdog whis leblowing” li e a u e,
we ocus on expe imen s on his ype o whis leblowing, while lea ing aside he
li e a u e on “ ai o ous whis leblowing”.22
2.1 Incen i es
The e a e se e al expe imen al labo a o y s udies and expe imen al su eys ha
analyze he beha io o po en ial whis leblowe s who a e bys ande s and ha e
he e o e no aken pa in he illegal conduc .
Feldman and Lobel (2010) con ibu ed signi ican ly o he esea ch on
incen i izing whis leblowe s by conduc ing a scena io-based expe imen al su ey.
The ques ionnai es build on he same ac ual scena io pu ing he pa icipan in he
posi ion o an employee who disco e s audulen beha io o he employe . Wha
a ies is he legal en i onmen , such as p o ec ion, high and low ewa d, du y, and
ine. The main indings o he su ey a e: Pa icipan s p edic highe epo ing
ac ion by hemsel es han by o he s (“holie han hou e ec ”). The mo e se e e
he pa icipan s a e he misconduc , he mo e likely is hei willingness o epo .
Fo pa icipan s wi h a high in e nal mo i a ion o epo he willingness o blow
he whis le ac oss he di e en legal en i onmen s did no a y much. Howe e ,
o pa icipan s wi h a low in e nal mo i a ion o epo he willingness o blow
he whis le was highes in he en i onmen s wi h high ewa ds o ines. While
Feldman and Lobel (2010), he e o e, ha e unea hed some ema kable esul s
on whis leblowing beha io , he di e ence in he willingness o epo among he
20 C . also Co en and San o e (2017).
21 Fo an o e iew, see also B eue (2013).
22 Fo he la e ype o whis leblowing, see no ably Apes eguia e al. (2007); Bigoni e al. (2012); Co -
en and San o e (2017); Fel o ich and Hamaguchi (2018); and, o a e y ecen s udy, Bu gs alle and
P eil (2024).
732
K.U.Schmolke, V.U ikal
a ious legal en i onmen s is a he small and inconclusi e wi h ega d o he policy
implica ions.
A labo a o y expe imen conduc ed by B eue (2013) analyzes he e ec o
ewa d on whis leblowing beha io . Resul s show ha in he con ex o ax e asion
mone a y ewa ds inc ease he willingness o bys ande s o blow he whis le. The
la ge he ewa d, he s onge he inc ease in epo ing u ns ou . S ikelea he
(2016) in his labo a o y expe imen dealing wi h a co po a e he scena io also
shows an inc ease in he whis leblowing a e i ewa ds a e g an ed. He u he mo e
examines he co ela ion be ween he wage le el and he whis leblowing a e as well
as he con ic ion o he employee o be mo ally obliged o blow he whis le. He
ound a signi ican ly posi i e co ela ion in bo h ega ds. The highe hese la e
e ec s (boos ing he in e nal mo i a ion o blowing he whis le) a e, he lowe he
ne expec ed economic bene i he employe gains by g an ing addi ional inancial
ewa ds o whis leblowe s.
Bu le e al. (2020) in es iga e whe he and how he willingness o epo
co po a e misconduc is d i en by inancial ewa ds and/o social judgmen
and whe he and how hese ac o s in e ac in (de)mo i a ing whis leblowing.
Fu he mo e, hey di e en ia e be ween a scena io whe e he membe s o he
public a e awa e ha hey a e nega i ely a ec ed by co po a e misconduc and a
scena io whe e hey a e no . The expe imen consis s o ou s ages whe e he ac ual
whis leblowing game is played in s age h ee. S ages one, wo and ou se e he
pu pose o induce (s age one) and measu e iden i y and social cohesion among
he playe s be o e (s age wo) and a e (s age ou ) he whis leblowing game
is played. A he beginning he oles o “manage ” (one pa icipan ), “employee”
( wo pa icipan s) and “membe o he public” (six pa icipan s) a e assigned o
he pa icipan s. Only he h ee “ i m membe s” pa icipa e in s age one, wo and
ou while he six “membe s o he public” join he whis leblowing game in s age
h ee. This game is designed such ha he “manage ” decides whe he o double
he “ i m’s und” ha is la e on dis ibu ed among he “ i m membe s” by sol ing
a leas 8 o 12 p oblems ( eal-e o ask) o by “b eaking he law” which causes
losses o he “membe s o he public”. Thus, he w ongdoing esul s in a wel a e
loss whe e he “manage ” would be able o double he i m und anyway by sol ing
he p oblems. O he wise he wel a e implica ions o w ongdoing depend on he
con ibu ions o he “employees” o he i m und he size o which may be doubled
by he “manage ”. The “employees” may blow he whis le which is cos ly and
comes wi h a conside able mone a y penal y o he “manage ”. Bu le e al. employ
h ee ea men a ia ions by (1) adding a inancial ewa d o whis leblowe s, (2)
exposing hem o social judgmen ,23 and (3) making he “membe s o he public”
awa e o he losses hey incu by co po a e misconduc . A e ha ing pa icipa ed
in he expe imen he subjec s illed ou a su ey (s age i e). Di e ing om ou
expe imen Bu le e al. chose a amed design by using con ex ual labels like
“manage ”, “employee” o “b eaking he law”. The expe imen ’s esul s show ha
inancial ewa ds inc ease he willingness o blow he whis le ega dless o whe he
23 The “membe s o he public” could send smileys o a whis leblowe which show a iendly, indi e en
o disapp o ing ace.
739
Whis leblowing: incen i es andsi ua ional de e minan s
Command, disad an aged playe s a e mo e likely o blow he whis le han neu al
playe s (p < 0.1).
To summa ize:
– The e is whis leblowing e en when he e a e no incen i es.
Table 3 Desc ip i e s a is ics on a e age beha io in expe imen 1 (incen i es)—elici ed using he s a -
egy me hod
a In High Rewa d he likelihood o misconduc is signi ican ly highe compa ed o No Incen i es (p < .1)
F equency o
misconduc
F equency o whis leblowing
a e misconduc
A e age punishmen
o misconduc (Y)
No incen i es 0.06 0.33 66.41
Low ewa d 0.19 0.77 34.38
High ewa d 0.33a0.89 42.33
Low ine 0.13 0.91 58.13
High ine 0.11 0.94 55.56
Command 0.12 0.55 53.53
Fig. 1 F equencies o whis leblowing ac oss ypes in expe imen 1 (incen i es)—elici ed using he s a -
egy me hod
Table 4 p- alues o Fishe ’s exac es o di e ences in equencies o whis leblowing ac oss ea men s
in expe imen 1 (incen i es)
Low Rewa d s
No Incen i es
High Rewa d s
No Incen i es
Low Fine s
No Incen i es
High Fine s
No Incen i es
Ad an age < 0.1 < 0.01 < 0.01 < 0.01
Neu al < 0.01 < 0.01 < 0.01 < 0.01
Disad an age < 0.05 < 0.1 0.178 < 0.05
740
K.U.Schmolke, V.U ikal
– Compa ed o No Incen i es, whis leblowing is mo e likely in Low Fine, High
Fine, Low Rewa d, and High Rewa d.
– Whis leblowing is mo e likely in Low and High Fine han in Low and High
Rewa d.
– Whis leblowing is mo e likely o disad an aged playe s compa ed o neu al
and ad an aged playe s in No Incen i es.
– Ad an aged playe s’ willingness o blow he whis le ma ginally inc eases wi h
he size o he ewa d.
– Financial incen i es mi iga e he di e ence in willingness o blow he whis le
be ween playe ypes.
– Whis leblowing is mo e likely in Command compa ed o No Incen i es.
4.2 Expe imen 2: s a us o hesanc ioning au ho i y
Expe imen 2 analyzes whe he po en ial whis leblowe s eac o how he
sanc ioning au ho i y is a ec ed by he misconduc . Table 6 gi es desc ip i e
s a is ics o pa icipan s’ beha io , in pa icula pa icipan s’ B-D willingness o
blow he whis le. Fo comple eness we also epo he equencies o misconduc
by pa icipan A and he amoun o punishmen assigned o pa icipan A o
choosing Y by he au ho i y ac oss ea men s.
As in expe imen 1, whis leblowing is di e en om ze o in all ea men s.
Besides, he e is a highe willingness o blow he whis le o disad an aged play-
e s compa ed o neu al (p < 0.01) o ad an aged playe s (p < 0.01) in all ea -
men s (see Fig.2).
Table6 shows ha whis leblowing on a e age is in ac mo e likely when he
au ho i y is nega i ely a ec ed compa ed o posi i ely o no a ec ed. T ea men
e ec sizes and signi icance a ies ac oss playe ypes (see Fig.2 and Table7):
Disad an aged playe s a e signi ican ly mo e likely o blow he whis le when
he punishmen au ho i y is nega i ely a ec ed by misconduc compa ed o
no a ec ed o posi i ely a ec ed. Neu al and ad an aged playe s also blow
he whis le sligh ly mo e o en when he au ho i y is nega i ely a ec ed by
misconduc , bu he ea men di e ence ails o be signi ican .
To summa ize:
Disad an aged playe s a e mo e likely o blow he whis le when he au ho i y
is nega i ely a ec ed by misconduc compa ed o no a ec ed o posi i ely
a ec ed.
5 Discussion
5.1 Incen i es o whis leblowing
Al hough he e is whis leblowing e en when he e a e No Incen i es, he manipu-
la ions High Rewa d, Fine, and Command signi ican ly inc ease he likelihood
741
Whis leblowing: incen i es andsi ua ional de e minan s
o po en ial in o man s o blow he whis le. While highe willingness o blow he
whis le in he Rewa d and Fine ea men s con o ms heo e ically wi h a beha io al
model sugges ing ha agen s a e only in e es ed in inal mone a y payo s, he sig-
ni ican inc ease o whis leblowing in Command compa ed o No incen i es does
no . This esul suppo s he heo y o a p e e ence-shaping unc ion o law. Wi h
ega d o an exp essi e unc ion o law, he esul s a e, howe e , no clea -cu , since
he subjec s o ou expe imen ac ed anonymously in a one-sho game. Thus, he
appeal o social no ms canno ha e in luenced he subjec s’ beha io in a di ec way,
ha is by ying a epu a ional loss o o he social sanc ion o he conc e e ac ion
o non- epo ing. Tha does no exclude an indi ec in luence o such social no ms,
inducing subjec s o comply wi h common ules in gene al, because hey o he wise
eel shame o a loss in sel -es eem (c . Suns ein 1996). This, howe e , p esumes ha
agen s ha e al eady o med a p e e ence o comply wi h gi en ules when hey en e
he expe imen .
Fu he mo e, he esul s show clea ly ha Command is no as e ec i e in
inducing pa icipan s o blow he whis le as Fine o Rewa d, bo h o which o e
mone a y incen i es. A i s glance, one migh he e o e be inclined o disca d he
Command s a egy om a policy pe spec i e al oge he . This would, howe e , be
p ema u e, since a egula o o co po a ion adop ing a Command s a egy o induce
whis leblowing may a leas aise he whis leblowing a e modes ly a nea ly no cos .
This il s he cos –bene i calculus o egula o y s a egies o induce whis leblowing
in a o o Command. Fu he mo e, in he long un Command s a egies migh ha e
he po en ial o change he cul u al a i udes o people owa ds whis leblowing,
including hose who a e no in he posi ion o po en ial whis leblowe s. This, in
u n, may educe he cos s o whis leblowing wi h ega d o he h ea o e alia ion,
os acism and he like signi ican ly.
In ou expe imen , whis leblowing is mo e likely in he Fine ea men s han in
he Rewa d ea men s. This is in line wi h he esul s o Su e e al. (2010) wi h
ega d o hei indings on he size o he pa icipan s’ con ibu ions in he ea -
men s, whe e punishmen and ewa d ins i u ions a e imposed exogenously. An
explana ion o he obse ed di e ence could be loss a e sion. A i s sigh , he
highe willingness o blow he whis le in he Fine ea men s sugges s leaning on
a egula o y s a egy ha ines/sanc ions po en ial in o man s who know o he
misconduc in ques ion, bu ne e heless s ay silen . Howe e , a a second glance
Table 5 p- alues o Fishe ’s
exac es o di e ences in
equencies o whis leblowing
ac oss ypes in expe imen 1
(incen i es)
***p < 0.01, **p < 0.05, *p < 0.1
ad an age s.
neu al
ad an age s.
disad an age
neu al s.
disad an age
No incen i es 1.000 0.001*** 0.005**
Low ewa d 0.023** 0.001*** 0.482
High ewa d 1.000 1.000 1.000
Low ine 0.338 0.338 1.000
High ine 1.000 1.000 0.486
Command 1.000 0.157 0.080*
742
K.U.Schmolke, V.U ikal
his conclusion may be p ema u e o he ollowing eason: In ou expe imen , he
p obabili y o being “de ec ed” is he same o pa icipan s B-D who e ain om
blowing he whis le in he Fine and Rewa d ea men s. In eali y, howe e , egula-
ion on incen i izing whis leblowe s is ypically conside ed whe e he en o cemen
au ho i y (public au ho i y o employe ) lacks he in o ma ion o sanc ion miscon-
duc . Thus, he p obabili y o de ec ing he “silen bys ande ” is e y low. In such
scena ios, he e o e, ewa d schemes appea o be he supe io egula o y op ion o
induce an inside o sha e he p i a e in o ma ion abou misconduc wi h en o ce-
men au ho i ies.
We do no see a s ong c owding-ou e ec in he Rewa d ea men s as desc ibed
in Feldman and Lobel (2010). To he con a y, we obse e an inc ease in he
Table 6 Desc ip i e s a is ics on beha io in expe imen 2 (au ho i y)—elici ed using he s a egy
me hod
F equency o
misconduc
F equency o whis leblowing
a e misconduc
A e age
punishmen o
misconduc (Y)
Nega i e 0.35 0.34 73.29
No a ec ed 0.33 0.30 61.94
Posi i e 0.33 0.26 7.71
Fig. 2 F equencies o whis leblowing ac oss ypes in expe imen 2 (au ho i y)—elici ed using he s a -
egy me hod
Table 7 p- alues o Fishe ’s
exac es o di e ences in
equencies o whis leblowing
ac oss ea men s in expe imen
2 (au ho i y)
***p < 0.01, **p < 0.05, *p < 0.1
Ad an age Neu al Disad an age
Nega i e s. No A ec ed 1.000 0.746 0.040**
Nega i e s. Posi i e 0.703 0.392 0.021**
Posi i e s. No A ec ed 0.701 0.723 0.813
743
Whis leblowing: incen i es andsi ua ional de e minan s
likelihood o po en ial in o man s o blow he whis le o high and low ewa ds. This
may be due o he ac ha e en in Low Rewa d he loss in in insic mo i a ion is
o e compensa ed by he u ili y gained h ough he ewa d. To pu i di e en ly, ou
esul s do no ule ou a c owding-ou e ec in case he ewa d we e se (e en) lowe .
We do no ind a signi ican inc ease in he whis leblowing a e on a e age
depending on he size o ewa d and ines. Tha means, ha he expec ed u ili y gain
om he High Fine/Rewa d in compa ison o Low Fine/Rewa d is—on a e age—no
s ong enough o aise he whis leblowing a e. One eason is ha whis leblowing
a es a e al eady e y high in Low Fine and in Low Rewa d (especially o
disad an aged playe s) which does no lea e much oom o inc ease. P ima is a,
his appea s o sugges a egula ion s a egy ha con ines i sel o a he modes
inancial incen i es, a leas as a i s s ep. Howe e , we e ain om jumping o
such a conclusion, since he pe cep ion o ewa d and ine sizes may be highly
con ex -dependen and subjec i e. Fu he mo e, we ac ually do obse e a signi ican
inc ease wi h ega d o High Rewa d in compa ison o Low Rewa d o he subse
o ad an aged pa icipan s, and i can be assumed, ha a egula o also aims a
e ec i ely incen i izing such bys ande s p o i ing om he misconduc in ques ion.
The signi icance o he inc ease in he willingness o ad an aged pa icipan s
o blow he whis le in he High Rewa d ea men compa ed o he Low Rewa d
ea men has o be seen agains he backd op o a no iceably low whis leblowing
a e o his ype in Low Rewa d. In ligh o he low p obabili y o de ec ing he
silen —albei ad an aged—bys ande in eal li e (see abo e), we do no conside
Fine as a supe io egula o y s a egy o po en ial in o man s bene i ing om he
misconduc in compa ison o su icien ly luc a i e ewa d schemes.
5.2 Si ua ional de e minan s o whis leblowing
As o he likelihood o blowing he whis le ac oss ypes, we ind ha whis leblowing
is mo e likely o disad an aged playe s compa ed o neu al and ad an aged
ones in No Incen i es. As a consequence o he e y high whis leblowing a e o
disad an aged playe s in No Incen i es, he inc ease in he likelihood o blow he
whis le o disad an aged playe s due o addi ional incen i es is ela i ely low. Wi h
ega d o Command i e en ails o be signi ican . F om a policy pe spec i e, hese
esul s sugges ha whis leblowe incen i e schemes may no be necessa y wi h
ega d o he ic ims o he misconduc in a wide ange o scena ios.
This sugges ion con o ms wi h he obse a ion ha , in eali y, he ic im o he
misconduc (= he disad an aged pa y) is no he p ima y add essee o incen i e
schemes o u he whis leblowing anyway. F om a legal poin o iew his can
be explained as ollows: I he misconduc is no concealed om he ic im (open
misconduc ) o he ic im o he wise knows abou he misconduc , he gene ally has
su icien incen i es o (1) in o m he en o cemen au ho i ies in o de o s op he
misconduc o make he pe pe a o epai he ha m done and/o (2) claim damages
be o e he cou s. I he misconduc is concealed om he ic im, i does no ha e
any p i a e in o ma ion o sha e wi h he au ho i ies and is he e o e no sui able
add essee o incen i es o blow he whis le. Howe e , he e is an excep ion o
744
K.U.Schmolke, V.U ikal
his easoning whe e he ha m done o he in o med pa y (“ ic im”) is no se e e
enough o mo i a e him o ac . In he legal li e a u e, he p oblem o p i a e law
en o cemen in case o dispe sed low- alue damage is well-known and in ensely
deba ed. The en o cemen p oblem may be agg a a ed whe e he e is no indi idual
claim o sel -en o ce. In he la e case, hough, he “ ic im” may al e na i ely
in o m he compe en public au ho i y o he p i a e pa y who has a claim in o de
o s op he misconduc and/o make he pe pe a o epai he ha m done.
Howe e , co po a ions could p obably s ill make use o he high willingness o
disad an aged employees o epo in o de o p omo e in e nal whis leblowing. They
could do so by implemen ing a communica ion s a egy ha eminds employees
ha misconduc which ha ms he company may also ha m hem. The ob ious case
is whe e he misconduc pu s he company in jeopa dy and, as a consequence,
may esul in he employees losing hei jobs. Alluding o such media ed ha m ul
consequences may, he e o e, mo i a e employees o epo .27
Ha ing said ha , whis leblowe incen i es p ima ily add ess neu al o
ad an aged inside s. We do no obse e a signi ican di e ence in he willingness
o blow he whis le be ween neu al and ad an aged ypes in No Incen i es.
Fu he mo e, in his ea men he whis leblowing a es o hese ypes a e a he
low. This sugges s, ha equali y p e e ences o he Feh -Schmid kind o simila
ai ness p e e ences a e a he weak o such ypes. In con as , bo h ypes a e highly
esponsi e o inancial incen i es. As a consequence, o bo h neu al and ad an aged
playe s as he main a ge s o whis leblowe egula ion in eal li e inancial incen i e
schemes, a leas o he Rewa d kind (see explana ion abo e) and coming along wi h
su icien p o ec ion om e alia ion, p omise o be highly e ec i e in making hem
blow he whis le.
Apa om i s compa a i ely modes impac on he willingness o blow he
whis le ac oss all playe ypes Command only aises he likelihood o blow he
whis le signi ican ly o ad an aged playe s. Thus, om a policy pe spec i e ou
esul s sugges no o ocus on a Command s a egy as an exclusi e egula o y
measu e, bu a he o deploy i as a (nea ly) cos less “add-on”.
No Incen i es in expe imen 1 and No A ec ed in expe imen 2 di e in only
one aspec . While in No A ec ed he misconduc dec eases o al wel a e, i does
no a ec o al wel a e in No Incen i es. The e o e, one migh expec a highe
willingness o blow he whis le in No A ec ed. Howe e , his is no he case. Resul s
a e simila in bo h expe imen s, no playe ype is mo e willing o blow he whis le
when o al wel a e is des oyed. I a all, we obse e a endency o disad an aged
playe o be less willing o blow he whis le in his si ua ion. One can conclude ha
he willingness o blow he whis le does no depend on he misconduc ’s impac
on o al wel a e. This calls he wide-sp ead assump ion in o ques ion ha he
nega i e wel a e impac o misconduc is an impo an d i e o whis leblowe s.
I appea s ha he ela ionship be ween “mo al in ensi y”, i.e. one’s own e alua ion
o he deg ee o he misconduc ’s immo ali y (c Singe e al. 1998), as a d i e o
whis leblowing and he nega i e impac o he misconduc on social wel a e may no
be as di ec and clea -cu as assumed by pa s o he li e a u e (c Iwasaki 2020).
27 We hank an anonymous e e ee o his hough .
745
Whis leblowing: incen i es andsi ua ional de e minan s
5.3 S a us o sanc ioning au ho i y
Expe imen 2 p o ides e idence ha he willingness o blow he whis le a leas
o one ype depends on how and whe he he sanc ioning au ho i y is a ec ed by
he epo ed misconduc . Mo e conc e ely, we ind ha una ec ed bys ande s and
inside s o whom he misconduc ca ies u ili y a e no a ec ed by he s a us o
au ho i y. Thei willingness o blow he whis le is a he low no ma e how he
au ho i y is a ec ed by he misconduc . Fo ic ims o he misconduc , howe e ,
we ind signi ican di e ences. F om disad an aged inside s, a nega i ely a ec ed
au ho i y ecei es in o ma ion mo e equen ly han an au ho i y who is posi i ely o
no a ec ed. Thus, companies o employe s implemen ing in e nal whis leblowing
schemes migh conside o s ess in hei codes o conduc o elsewhe e ha
hey hemsel es su e om he misconduc o be disclosed by he po en ial
whis leblowe . Howe e , his sugges ion comes wi h he subs an ial quali ica ion
ha he ic ims o he espec i e misconduc a e gene ally no he main a ge o a
whis leblowe scheme as explained abo e.
6 Conclusion
How o make inside s epo misconduc o a sanc ioning au ho i y? In wo
labo a o y expe imen s we analyzed he in luence o ( inancial) incen i es and
si ua ional ame condi ions on inside s’ willingness o blow he whis le. Con a y
o o he s udies, we do no measu e s a ed in en ion o blow he whis le. Ou
con ibu ion is an expe imen al design ha measu es ac ual whis leblowing beha io
in a con olled en i onmen , and ha is easily adap able o o he incen i e s a egies
and si ua ional de e minan s on he willingness o epo misconduc .
Re alia ion and p o ec ion agains e alia ion a e appa en candida es o
ex ensions. Fo he ime being, we excluded his aspec o easons o simplici y.
Including a e alia ion h ea in ou expe imen al design may a leas pa ly o se he
incen i e e ec o he o he s a egies. So a , we ocused exclusi ely on punishmen
as a “ emedy” o he misconduc . Ano he na u al ex ension is he compensa ion o
he losses he ic ims incu ed because o he misconduc . Finally, wi h ega d o he
compa a i e whis leblowing a es o neu al and ad an aged playe s in Rewa d and
Fine, i would p omise insigh ul esul s o add ex ensions wi h di e ing, a he low
p obabili ies o de ec ing non- epo ing pa icipan s.
In ou cu en expe imen al design he misconduc was designed as an i-social
beha io . The e was no aud in ol ed. An ex ension ha s eng hens an i-social
beha io wi h audulen beha io would be a s aigh o wa d ampli ica ion.
Pa icipan s in ou expe imen s we e uni e si y s uden s. On he one hand, s uden s
will e en ually become employees and uni e si y misconduc is a ele an issue, oo.
On he o he hand, conduc ing he expe imen wi h po en ial whis leblowe s on eal
co po a e misconduc would be a p omising oad o u u e esea ch.
Supplemen a y In o ma ion The online e sion con ains supplemen a y ma e ial a ailable a h ps:// doi.
o g/ 10. 1007/ s11573- 025- 01223-0.
746
K.U.Schmolke, V.U ikal
Funding Open Access unding enabled and o ganized by P ojek DEAL. The expe imen s we e unded
ou o public esou ces, in his case ou o esou ces p o ided by he uni e si y bo h au ho s we e a he
ime wo king o .
Da a a ailabili y The Da a is on ile wi h au ho s and will be made a ailable o e iewe s and o he
pe sons wi h a legi ima e in e es .
Decla a ions
Con lic o in e es The au ho s ha e no con lic s o in e es o decla e ha a e ele an o he con en o
his a icle.
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