Tacit Lobbying Agreements: An Experimental Study

35 Pages Posted: 24 Aug 2011

See all articles by Jens Grosser

Jens Grosser

affiliation not provided to SSRN

Ernesto Reuben

New York University (NYU) - New York University, Abu Dhabi; IZA Institute of Labor Economics

Agnieszka Tymula

The University of Sydney - School of Economics

Date Written: November 1, 2010

Abstract

We experimentally study the common wisdom that money buys political influence. In the game, one lobbyist has the opportunity to influence redistributive tax policies in her favor by transferring money to two competing candidates. The success of the lobbying investment depends on whether or not the candidates are willing to respond and able to collude on low‐tax policies that do not harm their relative chances in the elections. In the experiment, we find that lobbying is never successful when the lobbyist and candidates interact just once. By contrast, it yields substantially lower redistribution in about 40% of societies with finitely‐repeated encounters. However, lobbying investments are not always profitable, and profit‐sharing between the lobbyist and candidates depends on prominent equity norms. Our experimental results shed new light on the complex process of buying political influence in everyday politics and help explain why only relatively few corporate firms do actually lobby.

Keywords: lobbying, redistribution, elections, bargaining, collusion

JEL Classification: D72, H10, K42

Suggested Citation

Grosser, Jens and Reuben, Ernesto and Tymula, Agnieszka, Tacit Lobbying Agreements: An Experimental Study (November 1, 2010). Columbia Business School Research Paper, Available at SSRN: https://ssrn.com/abstract=1915435 or http://dx.doi.org/10.2139/ssrn.1915435

Jens Grosser

affiliation not provided to SSRN ( email )

Ernesto Reuben (Contact Author)

New York University (NYU) - New York University, Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Agnieszka Tymula

The University of Sydney - School of Economics ( email )

Social Sciences Building
The University of Sydney
Sydney, NSW 2006 2006
Australia

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