Campaign advertising and voter welfare

Prat, Andrea (1999) Campaign advertising and voter welfare. 2152. Centre for Economic Policy Research, London, UK.

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Abstract

This paper investigates the role of campaign advertising and the opportunity of legal restrictions on it. An electoral race is modelled as a signalling game with three classes of players: a continuum of voters, two candidates, and one interest group. The group has non-verifiable insider information on the candidates’ valence and, on the basis of this information, offers a contribution to each candidate in exchange for a favourable policy position. Candidates spend the contributions they receive on non-directly informative advertising. This paper shows that: (1) a separating equilibrium exists in which the group contributes to a candidate only if the insider information about that candidate is positive; (2) although voters are fully rational a ban on campaign advertising can be welfare-improving; and (3) split contributions may arise in equilibrium (and should be prohibited).

Item Type:	Monograph (Discussion Paper)
Official URL:	http://www.cepr.org
Additional Information:	© 1999 Andrea Prat
Uncontrolled Keywords:	elections, campaign contributions, advertising, voter welfare, split contributions
Library of Congress subject classification:	H Social Sciences > HB Economic Theory J Political Science > JA Political science (General)
Journal of Economic Literature Classification System:	D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legislatures, and Voting Behavior M - Business Administration and Business Economics; Marketing; Accounting > M3 - Marketing and Advertising > M37 - Advertising D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information
Sets:	Collections > Economists Online Departments > Economics Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Rights:	http://www.lse.ac.uk/library/rights/LSERO.htm
Identification Number:	2152
URL:	http://eprints.lse.ac.uk/5218/

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