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In recent years, policymakers have focused significant attention on the use of financial incentives as a means of encouraging whistleblower reporting. While such incentives are ostensibly meant to increase the likelihood that fraud will be identified in a timely manner, prior research in psychology calls this proposition into question. We point to the psychological theory of motivational crowding, which predicts that offering financial incentives may unintentionally hijack a person’s intrinsic moral motivation to “do the right thing” (i.e., an autonomous motivation) and replace it with a motivation focused primarily on the financial benefit to be received (i.e., a controlled motivation). Inspired by this theory, we conducted an experiment and found that, in certain contexts, whistleblower incentive programs may inhibit reporting to a greater extent than if such incentives were not offered at all. We believe our results have important implications for auditors, regulators, and those charged with organizational governance.
Leslie Berger, Wilfrid Laurier University
Stephen Joseph Perreault, Providence College
James Wainberg, University of Waterloo