Congruence Among the Voters and Contributions to Political Campaigns

Economics

Further details

This paper builds a theory of political campaign contributions. Interest groups can engage in non-directly informative political advertising in order to signal their private information on the valence of candidates. The paper's key insights are: (a) campaign contributions can be rationalized by interest groups signalling benefits; (b) electoral campaigns are cheaper, the more congruent the voters; (c) incumbents receive more contributions because the interest groups that seek re-election are better informed about their valence than other voters; (d) campaign contributions increase the voter welfare.