27 June 2015


'The Invisible Hand: When the Firm Becomes the Bully' by Kim R. Sawyer develops
a model of workplace bullying based on the optimizing behavior of a bully, a target and the bystanders. The model implies that workplace bullies disguise their bullying so as to seemingly comply with anti-bullying statutes. Workplace bullying is different from that of the schoolyard; it is more precise, more subtle and more strategic. Workplace bullying subsumes whistleblowing. When an employee blows the whistle, they initiate a process where the firm is now exposed to a new risk. The risk-minimizing firm has a choice whether to fully protect the whistleblower, or to absorb the ethics of the respondent to the whistleblowing. When a firm decides to underwrite the respondent, their optimal strategy is that of the invisible hand which is designed to inhibit the career of the whistleblower and induce their exit from the firm; without signaling that to a regulator. The whistleblower is placed on a slow drip. Regulators, like whistleblowers, must learn to become more strategic.