The sound of silence: Does competition decrease whistleblowing? Evidence from a preregistered experiment

Authors: Konstantinos Ioannidis

Stage: Under review at Journal of Behavioral and Experimental Economics

Abstract: We investigate whether market competition suppresses whistleblowing, using a high-powered, preregistered experiment (N=240). In a setting where firms either operate independently or compete in a tournament for market revenue, managers choose between a productive task and breaking the law to double firm surplus at the expense of the public, while employees decide whether to report misconduct at a personal cost. Aggregate results indicate that competition has a statistically null effect on whistleblowing. While we observe a directional increase in manager lawbreaking under competition, this does not translate into a significant erosion of the propensity to report misconduct. Exploratory analysis reveals heterogeneous treatment effects by population: whistleblowing decreased significantly in our Birmingham pool, but remained unaffected in Cambridge.

Keywords: whistleblowing, market competition, corporate fraud, moral erosion, experiment

JEL codes: C92, D63, D91, G33, K42, M14

Presented at: 13^th Oligo Workshop (Cambridge, 2025), 10^th Annual Conference on ``Contests: Theory and Evidence'' (Reading, 2024), 3^rd BUE-EBEL International Conference in Behavioural and Experimental Economics (Cairo, 2023), Economic Science Association World Meeting (Lyon, 2023)