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Political Contributions and Insurance

  • Bryan Engelhardt

    ()

    (Department of Economics, College of the Holy Cross)

  • Justin Svec

    ()

    (Department of Economics, College of the Holy Cross)

We propose a mechanism that eliminates the incentive for risk-averse agents to influence government policy via political contributions. The mechanism requires the government to create a political insurance exchange where agents can insure against the outcome of a government decision and firms selling insurance announce and commit to a price of insurance and their political contributions. If the exchange contains actuarially fair priced insurance, then the agent fully insures and neither the firm nor agent lobbies the government. The exchange is better than contribution limits because it is welfare-enhancing, more fair, and does not restrict speech.

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File URL: http://college.holycross.edu/RePEc/hcx/Engelhardt-Svec_PoliticalInsurance.pdf
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Paper provided by College of the Holy Cross, Department of Economics in its series Working Papers with number 1204.

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Length: 11 pages
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:hcx:wpaper:1204
Contact details of provider: Phone: (508)793-3362
Fax: (508) 793-3708
Web page: http://www.holycross.edu/departments/economics/website/

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  1. Stephen Ansolabehere & John M. de Figueiredo & James M. Snyder Jr, 2003. "Why is There so Little Money in U.S. Politics?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 105-130, Winter.
  2. John M. de Figueiredo & Brian S. Silverman, 2002. "Academic Earmarks and the Returns to Lobbying," NBER Working Papers 9064, National Bureau of Economic Research, Inc.
  3. de Figueiredo, John M & Silverman, Brian S, 2006. "Academic Earmarks and the Returns to Lobbying," Journal of Law and Economics, University of Chicago Press, vol. 49(2), pages 597-625, October.
  4. Levitt, Steven D, 1994. "Using Repeat Challengers to Estimate the Effect of Campaign Spending on Election Outcomes in the U.S. House," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 777-98, August.
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