Influence without Bribes: A Noncontracting Model of Campaign Giving and Policymaking

Efforts to find empirical evidence that campaign money impacts policymaking choices have offered scant support for interest group influence. A possible explanation is that the hypothesis that those receiving campaign monies should adjust their policy choices to favor their donor requires the untenable assumption that interest groups and legislators can implement contracts. We develop a new, alternative, model in which legislators and interest groups cannot engage in any form of contracting, and legislators care about both the policy and fundraising implications of their policy choices. In our model, an interest group gives only to those it believes shares its policy preferences. Nonetheless, we show that the group’s giving impacts incumbent policy choices. Importantly, when groups ideologically match, the relationship between actual contributions and bias is not straightforward. As long as a group is uncertain about a member’s primitive policy preference, it can influence her policymaking even when it contributes to her challenger or abstains from giving altogether.