Working Paper: NBER ID: w24413
Authors: Laurent Bouton; Micael Castanheira; Allan Drazen
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.
Keywords: No keywords provided
JEL Codes: D72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Electoral motive for small donors (D72) | Contribution behavior of small donors (D64) |
| Closeness of the election (K16) | Contributions from small donors (D64) |
| Contributions to the trailing candidate are less than their intrinsic advantage (D79) | Contributions to the trailing candidate (D79) |
| Caps on contributions (Z23) | Electoral prospects of candidates impacted by such caps (D72) |