A fresh look at whistleblower rewards

Research on whistleblowing has increased significantly in the last decades, and so has the number of laws governing whistleblowing. Whereas the EU recently enacted a Directive (Directive 2019/1937) protecting whistleblowers, the US has gone one step further long ago, not only protecting them but also offering substantial monetary rewards for their information. More countries are now adopting reward programs, while numerous recent instances of corporate wrongdoing suggest that the central promise of these programs: increasing detection and deterrence of wrongdoing, is highly needed not only in the US. These developments warrant a review on the optimal design of these programs, based on experience and available evidence, to obtain optimal deterrence and avoid policy mistakes. In this paper, we review the evidence for the effectiveness of the US whistleblower reward programs and consider some recent novelties. We also consider objections against these programs and local factors in the US that likely contribute to their success. Finally, we voice some concerns over the EU Directive’s ability to achieve its policy objective of enhancing enforcement of Union law. We find that the evidence for the effectiveness of reward programs is significant, and that common concerns about these programs have not materialized. Whereas much of the prior literature has focused on their viability and effectiveness, further research would do well in focusing on how to effectively design these programs, what has driven their success, and what local national characteristics could hamper their effectiveness outside the US.

Optimal deterrence: Exploring business cartels in Indonesia and their impact on the economy

A business cartel is a business that is carried out by business actors to obtain market power by regulating the market by fixing prices, for example, by limiting the availability of commodities on the market. This paper examines in detail business cartel practices in Indonesia, explores their impact on the economy, and analyzes KPPU as an unfair business eradication body. In so doing, this paper analyzes eight business cases in Indonesia to describe and evaluate the practices of economic cartels in the industry. Those cases were randomly chosen for different periods and different industrial sectors. Using a qualitative analysis method, it is found that business cartels, unfortunately, are still rather common practice in Indonesia. It is also found that business cartels harm economic development, citizens and customers, since they tend to be monopolistic practices so that the customers will have to pay high prices for limited commodities. In addition, KPPU needs to be reformed, and the amendment of current antitrust law also needs to be executed. Consequently, judges and lawmakers should understand the balance of business interest and public interest at the same time.

Punishment and Proportionality: Part 1

This essay concerns the question of the standard of justice by which the severity of punishment is determined relative to the seriousness of the crime for which it is inflicted. The essay puts forward the view that the standard by which the severity of punishment is determined to be proportional to the seriousness of the crime is the minimal amount of harm necessary to preserve social order. The view is based on an understanding of punishment as harm that is intentionally and openly inflicted on someone in retaliation for something he or she did. Such retaliation serves to preserve the social order when its targets are individuals who are less powerful than the retaliators or their agents. On this understanding of punishment, the standard the essay puts forward for determining the severity of punishment is more just than the standard applied to achieve optimal deterrence.

On preferring A to B, while also preferring B to A

In important contexts, people prefer option A to option B when they evaluate the two separately, but prefer option B to option A when they evaluate the two jointly. In consumer behavior, politics, and law, such preference reversals present serious puzzles about rationality and behavioral biases. They are often a product of the pervasive problem of “evaluability.” Some important characteristics of options are difficult or impossible to assess in separate evaluation, and hence choosers disregard or downplay them; those characteristics are much easier to assess in joint evaluation, where they might be decisive. But in joint evaluation, certain characteristics of options may receive excessive weight, because they do not affect much people’s actual experience or because the particular contrast between joint options distorts people’s judgments. In joint as well as separate evaluation, people are subject to manipulation, though for different reasons. It follows that neither mode of evaluation is reliable. The appropriate approach will vary depending on the goal of the task—increasing consumer welfare, preventing discrimination, achieving optimal deterrence, or something else. Under appropriate circumstances, global evaluation would be much better, but it is often not feasible. These conclusions bear on preference reversals in law and policy, where joint evaluation is often better, but where separate evaluation might ensure that certain characteristics or features of situations do not receive excessive weight.