How a firm can induce legislators to adopt a bad policy

Abstract

This paper shows why a majority of legislators may vote for a policy that benefits a firm but harms all legislators. The firm may induce legislators to support the policy by suggesting that it is more likely to invest in a district where voters or their representative support the policy. In equilibrium, no one vote may be decisive, so each legislator who seeks the firm's investment votes for the policy, though all legislators would be better off if they all voted against the policy. And when votes reveal information about the district, the firm's implicit promise or threat can be credible. Unlike influence mechanisms based on contributions or bribes, the behavior considered is time consistent and in line with the low campaign contributions by special interests.

Buying voters with uncertain instrumental preferences

“…The closest to us is Carrubba and Volden (2000), in which a larger-than-necessary coalition ensures no member can prevent the costly passing of other members' bills. Supermajorities are also found in the literature on legislative bargaining (Volden and Wiseman (2007), Tsai and Yang (2010), Dahm, Dur, and Glazer (2014)); for an overview, see Eraslan and Evdokimov (2019). For instance, Norman (2002) characterizes the nonsymmetric equilibria of the classical model of Baron and Ferejohn (1989) and shows that some proposals can be unanimously approved.…”

Sanctioning, selection, and pivotality in voting: theory and experimental results

“…Dal Bó (2007) allows for sophisticated vote-buying strategies by a single candidate. A related mechanism is at work in Dahm et al (2014) in a different context. Both approaches use the fact that there is a redundancy of votes for reaching a simple majority and that voters can be influenced by reward mechanisms.…”