Whistleblowing and diffusion of responsibility: An experiment

Abstract

Abstract In this paper we examine diffusion of responsibility in a whistleblowing experiment. We use a multi-player asymmetric information ultimatum game where only the proposer and a subset of the responders (the information insiders) know the size of a pot that the proposer distributes among information insiders and outsiders. Insiders have a clear monetary incentive to whistleblow in case of a small pot in order to avoid rejection of seemingly unfair offers by outsiders; in case of a large pot only altruistic motives could explain that insiders whistleblow. We vary the number of information insiders, one or two, who can whistleblow. We find that in all treatments close to 60% of the insiders whistleblow when they are pivotal for both small and large pots. In a treatment where other insider can also blow the whistle, we observe a significant drop in case only altruistic motives can explain whistleblowing. We show that the effect is due to the extensive margin, i.e. the share of whistleblowers drops to 20%, while patterns of active whistleblowers do not change. In case of low pot sizes, where whistleblowing is in line with selfish motives, we do not observe diffusion of responsibility, in spite of a possible free riding incentive due to a positive cost of whistleblowing.