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A Theory of Small Campaign Contributions

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  • Bouton, Laurent
  • Castanheira, Micael
  • Drazen, Allan

Abstract

We present a model of electorally-motivated, small campaign contributions. The analysis uncovers interesting interactions among small donors and has novel implications for the effect of income inequality on total contributions and election outcomes. Moreover, it helps explain a number of empirical observations that seem anomalous when contributions are driven by the consumption or the influence motives. We also study the impact of different forms of campaign finance laws on contribution behavior, probabilities of electoral outcomes, and welfare. Our results are consistent with more behaviorally motivated donors when contributions are driven by the parties' strategic solicitation of funds. We also indicate how the model and its results may have important implications for empirical work on campaign contributions.

Suggested Citation

  • Bouton, Laurent & Castanheira, Micael & Drazen, Allan, 2018. "A Theory of Small Campaign Contributions," CEPR Discussion Papers 12789, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12789
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    Cited by:

    1. Micael Castanheira De Moura & Steffen Huck & Johannes Leutgeb, 2020. "How Trump Triumphed :Multi-candidate Primaries with Buffoons," Working Papers ECARES 2020-45, ULB -- Universite Libre de Bruxelles.
    2. Bernhardt, Dan & Ghosh, Meenakshi, 2020. "Positive and negative campaigning in primary and general elections," Games and Economic Behavior, Elsevier, vol. 119(C), pages 98-104.
    3. Denter, Philipp, 2020. "Campaign contests," European Economic Review, Elsevier, vol. 127(C).
    4. Bekkouche, Yasmine & Cagé, Julia & Dewitte, Edgard, 2020. "The Heterogeneous Price of a Vote: Evidence from Multiparty Systems, 1993-2017," CEPR Discussion Papers 15150, C.E.P.R. Discussion Papers.
    5. Yasmine Bekkouche & Julia Cage, 2019. "The Heterogeneous Price of a Vote: Evidence from France, 1993-2014," Sciences Po Economics Discussion Papers 2019-09, Sciences Po Departement of Economics.
    6. Maria Petrova & Ricardo Perez-Truglia & Andrei Simonov & Pinar Yildirim, 2020. "Are Political and Charitable Giving Substitutes? Evidence from the United States," NBER Working Papers 26616, National Bureau of Economic Research, Inc.
    7. Avidit Acharya & Edoardo Grillo & Takuo Sugaya & Eray Turkel, 2019. "Dynamic Campaign Spending," Carlo Alberto Notebooks 601, Collegio Carlo Alberto.

    More about this item

    Keywords

    Campaign Contributions; Campaign Finance Laws; Electoral Motive; Income inequality;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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