Dark Money and Voter Learning

Abstract

We provide a model of dark money in elections. An ideologically extreme donor with private information about candidate ideology and quality can advertise on behalf of a candidate. Advertising reveals information about candidate quality to voters, who can learn from either donor-funded or neutral advertising. Voters update negatively about candidate ideology when ads are known to be donor-funded. Dark money suppresses source information and allows donors to advertise candidate quality while simultaneously concealing the ideological motivations behind ad funding. However, dark money leads voters to become skeptical of all advertising, which can disadvantage donors.

Formal Theories of Special Interest Influence

“…One recently active area of research is on campaign finance disclosure laws to regulate so-called "dark money." and Schnakenberg, Schumock and Turner (2023) analyze models of dark money regulation based on different premises about the purposes of spending. considers a model of influence on politicians through spending along the lines of Schnakenberg and Turner (2021) but in which the institutions in place may or may not require disclosure of contributions.…”

“…considers a model of influence on politicians through spending along the lines of Schnakenberg and Turner (2021) but in which the institutions in place may or may not require disclosure of contributions. Schnakenberg, Schumock and Turner (2023) analyze a model of dark money influence on voters who are using advertisements to learn about candidate attributes. In both models, donors may benefit from allowing dark money in order to conceal the motivations behind giving, but the ability to give secretly leads to a loss of credibility that sometimes backfires for the donors.…”

Political Influence and Dark Money

“…This study contributes to the literature by providing a theoretical model of how campaign finance disclosure affects policymaking. The only other theoretical model of dark money to our knowledge is Schnakenberg, Schumock and Turner (2023), which focuses on voter learning rather than on strategic politicians who directly influence policy. In contrast, this paper abstracts from the role of voters and focuses on politician learning and policy choice.…”

“…A separate strand of the informative campaign finance literature focuses on information transmission to voters (Ashworth 2006;Austen-Smith 1987;Coate 2004;Potters, Sloof and Van Winden 1997;Prat 2002). Recent research considers how dark money rules affect information transmission to voters (Schnakenberg, Schumock and Turner 2023). We omit these considerations from our model in order to focus specifically on another dimension of campaign finance transparency: influencing politicians' electoral fortunes and policy choices.…”