Prat, Andrea (1997) Campaign advertising and voter welfare. 118. Center for Economic Research, Tilburg University, Tilburg, The Netherlands.Full text not available from this repository.
This paper investigates the role of campaign advertising and the opportunity of legal restrictions on it. An electoral race is modeled as a signalling game with three classes of players: a continuum of voters, two candidates, and one interest group. The group has non-veri¯able insider information on the candidates' valence and, on the basis of this information, o®ers a contribution to each candidate in exchange for a favorable 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).
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