Helping Friends or Influencing Foes: Electoral and Policy Effects of Campaign Finance Contributions

43 Pages Posted: 6 Dec 2015 Last revised: 22 Jun 2018

See all articles by Keith E. Schnakenberg

Keith E. Schnakenberg

Washington University in St. Louis - Department of Political Science

Ian R. Turner

Yale University

Date Written: June 12, 2018

Abstract

Campaign finance contributions may influence policy by affecting elections or influencing the choices of politicians once in office. To study the trade-offs between these two paths to influence, we use a game in which contributions may affect electoral outcomes and signal policy-relevant information to politicians. In the model, a campaign donor and two politicians each possess private information correlated with a policy-relevant state of the world. The donor may allocate his budget to either an ally candidate who has relatively similar preferences or a moderate candidate whose preferences are relatively divergent from the donor's preferred policy. Contributions that increase the likelihood of the moderate being elected can signal good news about the donor's preferred policy and influence the moderate's policy choice. However, when the electoral effect of contributions is too small to demand sufficiently high costs to deter imitation by groups with negative information, this informational effect breaks down.

Keywords: campaign finance; informational lobbying; signaling

JEL Classification: C70, D72, D80

Suggested Citation

Schnakenberg, Keith E. and Turner, Ian R., Helping Friends or Influencing Foes: Electoral and Policy Effects of Campaign Finance Contributions (June 12, 2018). Available at SSRN: https://ssrn.com/abstract=2698862 or http://dx.doi.org/10.2139/ssrn.2698862

Keith E. Schnakenberg

Washington University in St. Louis - Department of Political Science ( email )

One Brookings Drive
One Brookings Drive
St. Louis, MO 63130
United States

Ian R. Turner (Contact Author)

Yale University ( email )

115 Prospect Street
New Haven, CT 06511
United States

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