Political Influence and Dark Money

Abstract

We study the consequences of campaign finance disclosure laws in a model of informative campaign finance. Campaign spending can affect electoral outcomes and also signal policy information to politicians. Under mandatory disclosure donors may engage in spending that runs counter to their electoral interests in order to signal good news regarding their preferred policy. When donors can use dark money the electoral price to influence policy increases to account for the possibility that donors use public spending to signal, but secretly offset the electoral costs with dark money. Our results suggest that observable spending will tend to increase for moderate candidates and decrease for extreme candidates when dark money is allowed. We also illustrate how different social pressures affect patterns of campaign spending.

Dark Money and Voter Learning

“…Other models of campaign finance and lobbying focused on informing voters include Baron (1994); Coate (2004b); Desai and Duggan (2021); Meirowitz (2008); Prat (2002b). Models of campaign finance and lobbying that instead focus on using information to influence political elites include Austen-Smith (1995), Cotton (2009); Cotton and Dellis (2016), Dellis andOak (2019, 2020); Dellis (2023), Ellis and Groll (2020), Gordon and Hafer (2005), Lohmann (1995), Potters and Van Winden (1992), Schnakenberg (2017), Schnakenberg and Turner (2019, 2021, 2023b), and Wolton (2021. See Schnakenberg and Turner (2023a) for a recent review.…”

Understanding influence in informational lobbying

“…Schnakenberg and Turner (2023) provide more detail on the differences among formal theories of lobbying.8 https://www.consilium.europa.eu/en/policies/data-protection/ data-protection-regulation/ (accessed on February 14th, 2023).…”