Whistle-blowing and the incentive to hire

Authors

Jef De Mot
Murat C. Mungan, Texas A&M University School of LawFollow

Document Type

Article

Publication Date

7-2024

Journal Title

Economic Inquiry

ISSN

1465-7295

DOI

10.1111/ecin.13212

Abstract

We consider a previously neglected cost of whistle-blower awards: employers may base their hiring decisions, on the margin, not on the productivity of an employee but rather on the probability that the employee will become a whistle-blower. We develop a three-stage model to examine how productivity losses due to distortions at the hiring stage influence optimal whistle-blower rewards. We characterize optimal rewards for whistle-blowing, and show that when rewards can be chosen according to either the benefits of the employer from offending or the productivity of the worker being hired, productivity-based rewards are superior to benefit-based rewards.

First Page

1292

Last Page

1308

Num Pages

17

Volume Number

62

Issue Number

3

Publisher

Western Economic Association International

Rights

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited

Recommended Citation

Jef De Mot & Murat C. Mungan, Whistle-blowing and the incentive to hire, 62 Econ. Inquiry 1292 (2024).
Available at: https://scholarship.law.tamu.edu/facscholar/2121

File Type

PDF