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Does Political Ambiguity Pay? Corporate Campaign Contributions and the Rewards to Legislator Reputation

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  • Randall S. Kroszner
  • Thomas Stratmann

Abstract

Do politicians tend to follow a strategy of ambiguity in their policy positions or a strategy of reputational development to reduce uncertainty about where they stand? Ambiguity could allow a legislator to avoid alienating constituents and to play rival interests off against each other to maximize campaign contributions. Alternatively, reputational clarity could help to reduce uncertainty about a candidate and lead to high campaign contributions from favored interests. We outline a theory that considers conditions under which a politician would and would not prefer reputational development and policy-stance clarity in the context of repeat dealing with special interests. Our proxy for reputational development is the percent of repeat givers to a legislator. Using data on corporate political action committee contributions (PACs) to members of the U.S. House during the seven electoral cycles from 1983/84 to 1995/96, we find that legislators do not appear to follow a strategy of ambiguity and that high reputational development is rewarded with high PAC contributions.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7475.

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Date of creation: Jan 2000
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Handle: RePEc:nbr:nberwo:7475

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  1. Kroszner, Randall S & Stratmann, Thomas, 1998. "Interest-Group Competition and the Organization of Congress: Theory and Evidence from Financial Services' Political Action Committees," American Economic Review, American Economic Association, American Economic Association, vol. 88(5), pages 1163-87, December.
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  12. Randall S. Kroszner, 1999. "Is the Financial System Politically Independent? Perspectives on the Political Economy of Banking and Financial Regulation," University of Chicago - George G. Stigler Center for Study of Economy and State, Chicago - Center for Study of Economy and State 151, Chicago - Center for Study of Economy and State.
  13. Stratmann, Thomas, 1998. "The Market for Congressional Votes: Is Timing of Contributions Everything?," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 41(1), pages 85-113, April.
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  16. Randall S. Kroszner & Philip E. Strahan, 1999. "What Drives Deregulation? Economics And Politics Of The Relaxation Of Bank Branching Restrictions," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(4), pages 1437-1467, November.
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  21. Randall S. Kroszner, 1999. "Is the Financial System Politically Independent? Perspectives on the Political Economy of Banking and Financial Regulation," CRSP working papers 492, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  22. Shapiro, Carl, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 98(4), pages 659-79, November.
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Cited by:
  1. Randall S. Kroszner & Philip E. Strahan, 2000. "Obstacles to Optimal Policy: The Interplay of Politics and Economics in Shaping Bank Supervision and Regulation Reforms," CRSP working papers 512, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  2. Dalton Conley & Brian J. McCabe, 2008. "Bribery or Just Desserts? Evidence on the Influence of Congressional Voting Patterns on PAC Contributions from Exogenous Variation in the Sex Mix of Legislator Offspring," NBER Working Papers 13945, National Bureau of Economic Research, Inc.
  3. Randall S. Kroszner, 2000. "The economics and politics of financial modernization," Economic Policy Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Oct, pages 25-37.
  4. Adam Meirowitz, 2005. "Keeping the other candidate guessing: Electoral competition when preferences are private information," Public Choice, Springer, Springer, vol. 122(3), pages 299-318, March.

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