A Theory of Small Campaign Contributions

Abstract

We propose a theory of small campaign contributions driven by an electoral motive, i.e., the desire to influence election outcomes. Though small donors take as given the actions of others, strategic interactions induce patterns consistent with empirical findings, e.g., election closeness and underdog effects. We also study different forms of campaign finance laws, and show why caps should be combined with a progressive tax on contributions. Next, we introduce large donors and show that several conclusions in the literature may be significantly modified by the interaction with small donors. Throughout, we discuss the empirical implications of our findings.

Are Political and Charitable Giving Substitutes? Evidence from the United States

“…In the case of political donations, however, there is still no such consensus. Some scholars propose that political donations, even small ones, are driven by strategic incentives (Bouton et al, 2018). Others argue that they fulfill a consumption role (Ansolabehere et al, 2003).…”

“…7 For political donations, however, there is no comparable consensus on the drivers of giving. Some studies attribute political donations to instrumental motives such as to influence the policies that benefit the donors the most (Snyder Jr, 1990;Grossman and Helpman, 1996;Mian et al, 2010;Bouton et al, 2018). Other studies claim that individual donations to politicians are driven by a consumption motive (Ansolabehere et al, 2003).…”

The heterogeneous price of a vote: Evidence from multiparty systems, 1993–2017

“…Using data from the US Congress, Dharmapala and Palda (2002) find a negative relationship between the concentration of contributions and vote share. For a formal model of small campaign contributions, see in particular Bouton et al (2018).…”

Campaign contests

“…Assumptions 2 to 4 define something that in other contexts is often called a contest success function, see for example Skaperdas (1996). Most standard contest success functions are special cases of c(x i , θ i v ), for example the generalized logit, or Tullock, contest success function studied by Snyder (1989), Skaperdas and Grofman (1995), Klumpp and Polborn (2006), Balart et al (2018), or Bouton et al (2018), or the tournament model with potential head starts studied by Lazear and Rosen (1981), Herrera et al (2008), or Denter and Sisak (2015). 10 Voting is probabilistic and the probability that a voter casts her ballot for candidate j is u j (x, s v ) ∈ (0, 1).…”