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Discussion Paper Details

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Title: Campaign Advertising and Voter Welfare

Author(s): Andrea Prat

Publication Date: May 1999

Keyword(s): Advertising, Campaign Contributions, Elections, Split Contributions and Voter Welfare

Programme Area(s): Public Economics

Abstract: 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-verifiable insider information on the candidates' valence and, on the basis of this information, offers 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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Bibliographic Reference

Prat, A. 1999. 'Campaign Advertising and Voter Welfare'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2152