Question: Why wouldn't Nichols just alert authorities right away if he was behind this whole thing the whole time? Made no sense. Good plot twist, but in real life, you would think the mastermind would get Kimball tossed in jail ASAP to avoid being revealed like he was.
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Answer: One, the authorities are already on Kimball's trail, literally one step behind him the entire film, so Nichols wouldn't gain much by alerting them. Two, he knows that if Kimball finds out he (Nichols) alerted the police, it would pretty much prove to Kimball that Nichols was the one behind everything; safer for Nichols to appear innocent and, more important, cooperative, so that if and when Kimball is recaptured and tells his story, he has nothing on Nichols to tell the authorities. This backfires, of course, but it is the most logical course of action.