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Whistleblowing

Published online by Cambridge University Press:  01 May 2008

MICHAEL M. TING
MICHAEL M. TING*
Affiliation:
Columbia University
*
Michael M. Ting is Associate Professor of Political Science and Public Affairs, Political Science Department, Columbia University, 420 W 118th St., New York, NY 10027 ([email protected]).
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Abstract

By skipping managers and appealing directly to politicians, whistleblowers can play a critical role in revealing organizational information. However, the protection of whistleblowers can affect managers' abilities to provide employees with incentives to exert effort. This paper explores this tradeoff with a model of agency decision-making under incomplete information. In the game, an employee's effort determines a project's quality, and a manager chooses whether to approve the project and discipline the employee. The employee and politician wish for only “good” projects to be approved. By whistleblowing, an employee reveals the quality to a politician outside of the organization, who may override the manager's decision. A key finding is that from the politician's perspective, the benefits of whistleblower protections depend on the preferences of the manager. If the manager is inclined toward approving projects, then the costs of lower employee effort may outweigh the informational benefits of whistleblowing. The optimal policy may then be to ban whistleblowing. By contrast, when the manager is inclined toward rejecting projects, whistleblower protections prevent him or her from suppressing effort and are unambiguously beneficial.

Type
Research Article
Information
American Political Science Review , Volume 102 , Issue 2 , May 2008 , pp. 249 - 267
Copyright
Copyright © American Political Science Association 2008

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