Do political donations buy reputation in an elite gift-exchange game?

One way to view the entrenchment of favoured elites in political processes is as a repeated gift-exchange game in which reputations sustain beneficial favour exchanges at the expense of others. Within such a game, pragmatists seeking political favours will optimally invest in costly signals, such as gifts or political donations, to improve their reputation and maximise their political returns to that reputation. This view may have merit if simulations of a reputation-signalling gift-exchange game generates patterns of donations that closely match the empirical record. This paper presents agent-based simulations of such a game amongst a heterogeneous population. The aggregate simulated outcomes show a clustering of signalling strategies consistent with patterns of political donations in the UK, Germany and Australia, and also suggests a process by which entrenchment of interests occurs through exclusive access to a ‘social ladder’.