In this work we study the problem of misbehavior detection in wireless networks. A commonly adopted approach is to utilize the broadcasting nature of the wireless medium and have nodes monitor their neighborhood. We call such nodes the Watchdogs. In this paper, we first show that even if a watchdog can overhear all packet transmissions of a flow, any linear operation of the overheard packets can not eliminate miss-detection and is inefficient in terms of bandwidth. We propose a light-weigh misbehavior detection scheme which integrates the idea of watchdogs and error detection coding. We show that even if the watchdog can only observe a fraction of packets, by choosing the encoder properly, an attacker will be detected with high probability while achieving throughput arbitrarily close to optimal. Such properties reduce the incentive for the attacker to attack.