Tacit Lobbying Agreements: An Experimental Study

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.

Number of Pages in PDF File: 35

Keywords: lobbying, redistribution, elections, bargaining, collusion

JEL Classification: D72, H10, K42

working papers series